Delhi District Court
Cc No. 532187/16 (Old Cc No. 07/11 Cbi vs . C.V. Madan & Ors. Page 1 Of 169 on 23 December, 2016
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IN THE COURT OF SH. PITAMBER DUTT, SPECIAL
JUDGE (PC ACT)-02, (CBI) CENTRAL, TIS HAZARI
COURTS, DELHI
CC NO. 532187/2016 (OLD CC NO. 07/11)
RC NO. 2/87
CBI/SIU-X/NEW DELHI
Vs
1. C.V. MADAN
S/O SH. THAKUR DAS
MADAN R/O C-346, VIKAS
PURI, NEW DELHI.
2. SUNIT CHANDRA KANT
KHATAU (DECEASED) S/O
SH. CHANDRA KANT M.
KHATAU R/O 6,MANDIR
ROAD, WALKESHWAR,
BOMBAY.
3. H.S. NAGESHWARAN, S/O
SH. H.R. SRIKANTH IYER,
R/O FLAT NO. 2B WING,
AMIYANAND
COOPERATIVE SOCIETY,
KASHI DHRUV MARG,
DADAR, BOMBAY.
4. SATISH KUMAR CHOPRA
(DECEASED), S/O SH.
HARBANS LAL, R/O C-37,
KIRTI NAGAR, NEW
DELHI.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 1 OF 169
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5. PRADYUMAN KUMAR
KHANNA (DECEASED),
S/O SH. N.L. KHANNA,
R/O G-18, GREEN PARK,
NEW DELHI.
6. M/S. KEMING TOOLS CO.
LTD., BOMBAY.
Date of institution : 23.12.1989
Date of decision reserved on : 19.12.2016
Date of decision : 23.12.2016
JUDGMENT
1. Vide this judgment, I shall decide the case RC-
2/87-SIU-X, New Delhi registered on 26.05.1987 on the basis of written complaint of Sh. S.M. Mehra, Regional Manager-I, State Bank of Patiala, Regional Office, New Delhi against accused C.V. Madan, accused Sunit Chandra Khatau (deceased), accused H.S. Nageshwaran, accused Satish Kumar Chopra (deceased), accused Pradyuman Kumar Khanna (deceased) and accused M/s. Keming Tools Pvt. Ltd. u/s CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 2 OF 169 3 120 B IPC r/w Section 420, 468, 471 IPC. The brief facts necessitated giving rise of for registration of the present case as per the prosecution are given as under:-
2. The prosecution has alleged that accused C.V. Madan, the then Branch Manager, State Bank of Patiala , Janak Puri, New Delhi, had entered into criminal conspiracy with M/s Keming Tools Co. Pvt. Ltd. and in furtherance of their criminal conspiracy, accused C.V. Madan had released a sum of Rs.3.75 crore as loan in favour of M/s Keming Tools Co. Pvt. Ltd. without any sanction and authorization.
3. The prosecution has further alleged that accused C.V. Madan had opened a current account no. 254 in the name of M/s Keming Tools. Co. Pvt. Ltd, on 11.12.1986.
Accused H.S. Nageshwaran was the authorized signatory of the said account. Accused C.V. Madan transferred a sum of Rs.3.75 Crore in the said account on 11.12.1986 and accused H.S. Nageshwaran had diverted Rs.357.61 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 3 OF 169 4 lacs from the said account during 11.12.1986 to 18.12.1986 with the help of accused C.V. Madan, accused Sunit Chandra Kant Khatau (deceased), Chairman of M/s Keming Tools Co. Pvt. Ltd., accused Satish Kumar Chopra (Deceased), Liason Man of M/s Keming Tools Co. Pvt. Ltd. and accused Pradyuman Kumar Khanna (deceased), associate of accused C.V. Madan.
4. The prosecution has further alleged that for the above loan of Rs.3.75 crores, neither any proposal was submitted by M/s Keming Tools Co. Pvt. Ltd. to State Bank of Patiala, Janak Puri or to any other office of State Bank of Patiala nor any such loan was ever sanctioned by State Bank of Patiala, nor accused C.V. Madan was authorized to release / disburse amount of Rs.3.75 crores as loan to M/s Keming Tools Co. Pvt. Ltd., because, the sanction of loan for more than Rs. 2 crores required statutory prior approval of State Bank of India and CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 4 OF 169 5 Reserve Bank of India.
5. The prosecution has also alleged that in furtherance of the criminal conspiracy, accused H.S. Nageshwaran had issued cheque no. 076714 dated 11.12.1986 for Rs. 2,25,01,000/- for issuance of demand drafts favoring M/s. Keming Tools Co. Ltd. at Bombay pursuant to which accused C.V. Madan got issued 25 demand drafts bearing no. 004868 to 004892 amounting to Rs.9 lacs each payable at Bombay. Accused C.V. Madan delivered 11 demand drafts to accused S.C. Khatau (deceased) and remaining 14 demand drafts to accused H.S. Nageshwaran.
6. The prosecution has also alleged that these 25 drafts were deposited in the account of M/s. Keming Tools Co. Ltd. in various banks at Bombay. Accused H.S. Nageshwaran had given blank signed cheque no. 076701 to 76712 for Rs. 10 lacs each and cheque no. 076713 and 076715 for Rs. 5 lacs each, totaling to Rs. 1.30 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 5 OF 169 6 crores, after signing both on front and reverse side of these cheques, to accused C.V. Madan without mentioning the date and name of the payee. Accused C.V. Madan got filled those cheques through bank officials and diverted Rs.1.30 crores through accused S.K. Chopra (deceased), accused H.S. Nageshwaran and accused Pradyuman Kumar Khanna.
7. The CBI has filed the charge sheet after completion of investigation, against accused persons for the offence punishable u/s 120B IPC r/w section 420, 468, 471 IPC and Section 5(2) read with section 5(1)(d) of the Prevention of Corruption of Act, 1947. Accused C.V. Madan was dismissed from his service vide order dated 21.12.87 passed by Managing Director, thus sanction u/s 6 (1) of Prevention of Corruption Act, 1947 was not needed.
8. After completing all the preliminary proceedings, The Ld. Predecessor heard the arguments on charge and vide CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 6 OF 169 7 order dated 20.02.2007, framed the charges against accused C.V. Madan, H.S. Nageshwaran, Pradyuman Kumar Khanna (deceased) and accused company M/s. Keming Tools Co. Ltd. u/s 120B IPC r/w Section 420, 471 and 419 IPC and Section 5 (2) read with section 5 (1) (d) of the Prevention of Corruption Act, 1947 and substantive offences thereof.
9. Accused S.C. Khatau (deceased) and accused S.K. Chopra (deceased) have expired before framing of the charges, whereas accused Pradyuman Kumar Khanna has died during the pendency of the case.
10. In order to substantiate the charges against accused persons, prosecution has examined 66 witnesses.
❏ PW-1 is Sh. Subhash Chandra, who exhibited Specimen Signature Sheet of accused S.K. Chopra (deceased) (running into 10 sheets) as Ex. PW-1/A-1 to Ex. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 7 OF 169 8 PW-1/A-10.
❏ PW-2 is Sh. Baldev Raj Gandhi. He exhibited letter received in the Regional Office of State Bank of Patiala, Cannaught Place, New Delhi on 17.12.1986, issued by State Bank of Patiala, Janak Puri as Ex. PW-2/A-1 and letter dated 18.12.1986 as Ex. PW-2/A-2. ❏ PW-3 is Sh. Balraj Singh. He exhibited six Requisition Slips for Rs. 42 lacs, handed over to him by Sh. Popli as Ex.
PW-3/A1 to Ex. PW-3/A6, acknowledgment of receiving the payment on the reverse of these requisition slips are Ex. PW-3/A7 to Ex. PW-3/A12 and Remittance Slips as Ex. PW-3/B1 to Ex. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 8 OF 169 9 PW-3/B6.
❏ PW-4 is Achla Malik. She exhibited Cash Book Register for the period w.e.f. 22.11.1986 to 29.12.1986, pertaining to State Bank of Patiala, Paschim Puri as Ex. Pw-4/A1 and 6 entries at page no. 40 of cash book Ex. Pw-4/A-1 pertaining to payment of Rs. 42 lacs to Upender Popli as Ex. PW-4/A-2.
❏ PW-5 is Sh. A.K. Malhotra.
❏ PW-6 is Sh. Sunil Kumar Khanna, in whose presence search was conducted by the CBI at the residence of accused C.V. Madan at Vikas Puri on 17.06.1987. He exhibited search list dated 17.06.1987 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 9 OF 169 10 as Ex. PW-6/A. ❏ PW-7 is Sh. S.S. Suri, in whose presence search was conducted by the CBI at the office of accused company M/s. Keming Tools Co. Ltd. At Safdarjung Enclave on 17.06.1987. He exhibited search list as Ex. PW-7/A. ❏ PW-8 is Sh. Gurbax Lal Puri, in whose presence specimen signature and handwriting of accused C.V. Madan was obtained by the CBI. He exhibited Specimen handwriting signature of accused as Ex. PW-8/A1 to Ex. PW-8/A- 26. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 10 OF 169 11 ❏ PW-9 is Sh. Ramesh Chander Chugh.
He exhibited the carbon copy of letter sent by accused C.V. Madan to him as Ex.
PW-9/A1, letter issued by him to Sh. S.C. Verma to report in Janakpuri Branch on 15.12.1986 as Ex. PW-9/B, letter received from Regional office regarding sanction of leave to accused C.V. Madan as Ex. PW- 9/C and seizure memo dated 11.4.1988 as Ex. PW-9/D. ❏ PW-10 is Ms. Sangeeta Gupta. She exhibited Account Opening Form as Ex. PW-10/A, Specimen Signature Card as Ex. PW-10/B and Ex. PW-10/C, Ledger sheet pertaining to account no. 5323 as Ex. PW-10/D, Special Term Deposit Receipts issued in the name of Mohit CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 11 OF 169 12 Chopra under guardianship of S.K. Chopra and Simi Chopra as Ex. PW-10/E and Ex. PW-10/F and document Ex. PW- 10/G-1 to Ex. PW-10/G-3.
❏ PW-11 is Sh. Durga Chand. He exhibited Statement of account as Ex. PW-11/A, draft application form for issuance of draft in favor of accused S.K. Chopra (deceased) as Ex. PW-11/B, Debit Voucher dated 15.12.1986 as Ex. PW- 11/C, drafts dated 15.12.1986 as Ex. PW- 11/D and Ex. PW-11/E and carbon copy of draft advise as Ex. PW-11/F and Ex. PW-11/G. ❏ PW-12 is Sh. A.K. Jain. He exhibited Account Opening Form pertaining to CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 12 OF 169 13 account no.201 as Ex. PW-12/A, ledger sheet pertaining to account no. 201 as Ex. PW-12/B, cheques as Ex. PW-12/C-1 to Ex. PW-12/C-8, account opening form as Ex. PW-12/D, Credit Voucher dated 11.12.1986 as Ex. PW-12/E, Debit Voucher dated 11.12.1986 as Ex.PW- 12/E-1, Ledger sheet of account no. 254 as Ex. PW-12/F and cheque dated 11.12.1986 is Ex. PW-12/F-1.
❏ PW-13 is Sh. Sutender Mohan Mehra. He exhibited Note as Ex. PW-13/A, complaint dated 25.05.1987 as Ex. PW- 13/B, FIR as Ex. PW-13/C and Seizure Memos as Ex. PW-13/D to Ex. PW-13/H. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 13 OF 169 14 ❏ PW-14 is Smt. Anita Malik. She exhibited Debit Slip of the current account of M/s. Keming Tools Ltd as Ex. PW-14/A (D-12), Term Loan Register maintained at Janakpuri Branch of State Bank of Patiala as Ex. PW-14/B (D-46), page no. 70 and 71 of the register Ex. PW-14/B as Ex. PW- 14/B-1 and Ex. PW-14/B-2, Attendance Register pertaining to Janakpuri Branch of State Bank of Patiala as Ex. PW-14/C and page no. 39 of the said register as Ex. PW-14/C-1, Transfer Scroll Register for the period 07.10.1986 to 19.06.1987 pertaining to State Bank of Patiala, Janak Puri Branch as Ex. PW-14/D and entry encircled red at page no. 33 of the said register as Ex. PW-14/D-1, Demand Drafts dated 11.12.1986 as Ex. PW-14/E- CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 14 OF 169 15 1 to Ex. PW-14/E-25 and draft advices as Ex. Pw-14/E-26 to Ex. PW-14/E-50, Agreement for hypothecation as Ex. PW-
14/F.
❏ PW-15 is Sh. Naval Kishore. He
exhibited Seizure Memo as Ex. PW-15/1.
❏ PW-16 is Sh. Ranjit Sodha. He exhibited Personal Search Memo of the arrest of accused S.K. Chopra (deceased) as Ex. PW-16/A and Seizure Memo as Ex. PW-16/B. ❏ PW-17 is Sh. R.K. Kalra.
❏ PW-18 is Sh. Rajiv Mahajan.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 15 OF 169 16 ❏ PW-19 is Smt. Rajinder Kaur Kohli. She exhibited the entry in the register in token of receipt of cheque book as Ex. PW-19/1 and three ledger sheets in respect of account no. CA-201 pertaining to Mutual Finance and Investment as Ex. PW-19/2. ❏ PW-20 is Sh. J.K. Gupta.
❏ PW-21 is Sh. Abdul Ansari. He exhibited NSC no. G/2 584167 and NSC no. G/2 584168 of Rs.10,000/- each as Ex. PW- 21/A and Ex. PW-21/B, Identity Slip in respect of these NSCs as Ex. PW-21/C and Indra Vikas Patra no. C/0 013190 to 013193 with maturity value of Rs.5,000/- each as Ex. PW-21/D to Ex. PW-21/G. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 16 OF 169 17 ❏ PW-22 is Sh. Hunar Singh. He exhibited Postal Receipt no. 2700 as Ex. PW-22/A. ❏ PW-23 is Sh. Mohd. Quasim. He exhibited the MTNL bill for the billing cycle 01.02.1987 in respect of telephone no. 538214 installed at C-346, Vikas Puri in the name of Smt. Shashi Madan as Ex.
PW-23/A. ❏ PW-24 is Sh. Bansi Lal Shukla.
❏ PW-25 is Sh. Ram Singh.
❏ PW-26 is Sh. Kartar Singh.
❏ PW-27 is Sh. Upender Popli. He exhibited the entry on page no. 42 of the Attendance Register (D-43) as Ex. PW- CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 17 OF 169 18 27/A, Attendance Register as Ex. PW- 27/B, entry at point B on page no. 96 of the Transfer Scroll as Ex. PW-27/C and the Transfer Scroll as Ex. PW-27/D (D-
40). He also exhibited Transfer Scroll C (D-41) for the period 05.10.1986 to 13.06.1987 as Ex. PW-27/E, Transfer Application Form dated 11.12.1986 for a sum of Rs.2,25,01,000/- for issuance of draft in favor of M/s. Keming Tools as Ex. PW-27/F, entries at page no.14, 16 and 17 of the Cashier's Cash Book as Ex. PW- 27/G and Ex. PW-27/H (colly.), Receipt Register of Janakpuri Branch as Ex. PW- 27/J, Cash Scroll starting with alphabet M from pages 1 to 200 as Ex. PW-27/K, Scroll M-1 to M-4 at page no.131 of cash scroll register Ex. PW-27/K for Rs. 65 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 18 OF 169 19 each on 12.12.1986 as Ex. PW-27/L, four entries at page no.16 of the register Ex. PW-27/J for payments of Rs. 10 lacs each from serial no. 9 to 12 as Ex. PW-27/M (colly.), entries at serial no. 12 and 14 at receipt side at page no. 18 of the register Ex. Pw-27/J as Ex. PW-27/N-1 and Ex. PW-27/N-2, credit voucher and deposit pay in slip as Ex. PW-27/N-3 and Ex. PW- 27/N-4, entries at serial no. 30 at receipt side at page no. 19 of the register Ex. Pw- 27/J as Ex. PW-27/N-5, entry at serial no. 8 in the register Ex. PW-27/J showing payment of Rs. 1 lac to S.Kumar on 13.12.1986 as Ex. PW-27/N-7, entry at serial no. 9 dated 18.12.1986 on page no. 24 of register Ex. PW-27/J as Ex. PW- 27/N-8, cheques (D-6 to D-9) as Ex. PW-
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 19 OF 169
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27/N-9 to Ex. PW-27/N-12 and
endorsement on the top of page 163
dated 11.12.86 as Ex. PW-27/N-13.
❏ PW-28 is Sh. Keshav Dev Sharma. He exhibited entry no. 90659 at page no. 52 of his register pertaining to sale of non judicial papers of Rs.10/- and Rs.5/- respectively as Ex. PW-28/A, Non-
Judicial Paper of Rs.10/- with form of Agreement for hypothecation and guarantee (D-33) as Ex. PW-28/B, non- judicial paper of Rs.5/- pasted with the form of Agreement for hypothecation and guarantee (D-33) as Ex. PW-28/C and entries no. 90663, 90664 and 90665 at page no. 52 of his register pertaining to sale of non-judicial paper as Ex. PW-28/D, CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 20 OF 169 21 Ex. PW-28/E and Ex. PW-28/F respectively.
❏ PW-29 is Sh. Sharda Singh. He exhibited letter dated 30.06.1987 as Ex. PW-29/A. ❏ PW-30 is Sh. Mangat Rai Goyal. He exhibited proposed tour programme of Sh.
N.G. Sardana, General Manager
(Planning & Development) dated
24.11.1986, 26.12.1986 and 08.12.1986 as Ex. PW-30/A, Ex. PW-30/B and Ex.
PW-30/C. ❏ PW-31 is Sh. Arun Kumar Mahajan. He exhibited Specimen Signature Card of Sh. P.B. Kumar as Ex. PW-31/A, Cheque CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 21 OF 169 22 book issue register as Ex. PW-31/B, Zonal Receipt Register as Ex. PW-31/C and entries dated 04.12.1986 and 05.12.1986 in the said register as Ex. PW-31/D, Receipt Register of Regional Office as Ex. PW-31/E and entry at serial no. 324 dated 18.12.1986 at page no. 50 as Ex. PW-
31/F. ❏ PW-32 is Sh. Randhir Singh Sharma. He exhibited Account Opening Form pertaining to account no. 1457 in the name of M/s. Mohit Trading Corporation as Ex. PW-32/A, Specimen Signature Card signed by accused S.K. Chopra (deceased) as Ex. PW-32/B, Ledger Sheet pertaining to Account no. 1457 in the name of M/s. Mohit Trading CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 22 OF 169 23 Corporation as Ex. PW-32/C (colly.). ❏ PW-33 is Sh. Vijay Kumar Tandon. He exhibited pay in slip dated 22.12.1986 as Ex.PW-33/A, pay in slip dated 20.12.1986 as Ex. PW-33/B, draft no. 22/1456 dated 28.10.1986 for Rs. 3,10,000/- in favor of M/s. Khatau Engineering Services Pvt. Ltd. as Ex. PW-33/C, application for dated 12.11.1986 as Ex. PW-33/D and Draft no.
22/1525 dated 12.11.1986 for Rs.9,50,000/- in favor of M/s. Khatau Engineering Services Pvt. Ltd. as Ex. PW- 33/E. ❏ PW-34 is Sh. Veer Singh. He exhibited Seizure Memo dated 26.06.1987 as Ex. PW-34/A. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 23 OF 169 24 ❏ PW-35 is Sh. Durga Prasad Gupta. He exhibited Seizure Memo dated 06.06.1988 as Ex. PW-35/A, Account Opening Form pertaining to Saving Bank Account no. 15342 in the name of P.K. Khanna as Ex. PW-35/B and Specimen Signature Card of saving bank account no. 15342 in the name of Sh. P.K. Khanna as Ex. PW-35/C. ❏ PW-36 is Sh. T.R. Mehta. He exhibited Search List as Ex. PW-36/A, Arrest cum Personal Search Memo of accused P.K. Khanna as Ex. PW-36/B and Specimen Signatures and Writings of accused P.K. Khanna as Ex. PW-36/C-1 to Ex. PW-
36/C-16.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 24 OF 169 25 ❏ PW-37 is Sh. S.K. Sharma.
❏ PW-38 is Sh. Ramesh Chander
Khurana. He exhibited letter dated
27.10.1986 as Ex. PW-38/A, Hundi no. 3/86 dated 27.10.1986 for Rs.4,65,000/- as Ex. PW-38/B, letter dated 28.10.1986 as Ex. PW-38/C, letter dated 29.10.1986 as Ex. PW-38/D, Transfer Voucher dated 27.10.1986 for Rs. 3,98,958/- as Ex. PW- 38/E, proposal dated 06.11.1986 bearing no. 22/51 as Ex. PW-38/F, letter of pledge agreement as Ex. PW-38/G, Letter of lien and set off as Ex. PW-38/H, Bill Form dated 27.10.1986 as Ex. PW-38/J, Stamp Undertaking dated 27.10.1986 as Ex. PW- 38/K, Declaration dated 27.10.1986 as Ex. PW-38/L, Undertaking dated CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 25 OF 169 26 27.10.1986 as Ex. PW-38/M, Authority Letter dated 27.10.1986 as Ex. PW-38/N, letter dated 27.10.1986 as Ex. PW-38/P, letter dated 27.10.1986 as Ex. PW-38/Q, letter dated 12.03.1987 as Ex. PW-38/R, another letter dated 12.03.1987 as Ex. PW-38/S and letter dated 01.04.1987 as Ex. PW-38/T. ❏ PW-39 is Sh. Satish Kumar Sehgal. He has been partly examined in chief and his further examination could not be carried out due to his death.
❏ PW-40 is Sh. Harmesh Kumar. He exhibited Seizure Memo dated 14.07.1987 (D-76) as Ex. PW-40/1, CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 26 OF 169 27
Seizure Memo dated 07.06.1988 (D-104) as Ex. PW-40/2, Cheque no. 190054 dated 21.12.1986 for Rs. 75 lacs as Ex. PW-40/3 (D-11), Ledger Sheet in respect of STDR account no. 1186 in the name of Mohit Chopra under guardianship of accused S.K. Chopra as Ex. PW-40/4 (D-
105), ledger sheet in respect of STDR account no. 1187 in the name of Simmi Chopra under Guardianship of accused S.K. Chopra as Ex. PW-40/5 (D-105).
❏ PW-41 is Sh. B.S. Rathore. He exhibited letter dated 29.09.1987 ex. PW- 41/1 (D-126).
❏ PW-42 is Sh. Ravi Gupta.
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❏ PW-43 is Sh. G.R. Kamath. He
exhibited Seizure Memo dated
24.11.1987 as Ex. PW-43/1 (D-315). ❏ PW-44 is Sh. V.P. Kumar. He exhibited seizure memo dated 14.10.1988 as Ex. PW-44/1 (D-275).
❏ PW-45 is Sh. N.S. Sandhu. He exhibited the account opening form dated 16.12.1986 as Ex. PW-45/1, Specimen signature cards as Ex. PW-45/2A and Ex. PW-45/2B, Introductory letter issued by the Deputy Manager of State Bank of India, C&I Division, Bangalore as Ex. PW- 45/3, pay in slip as Ex. PW-45/4 and Seizure Memo dated 11.09.1987 as Ex. PW-45/5.
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❏ PW-46 is Sh. Surinder Gupta. He
exhibited Specimen Signature Card as Ex. PW-46/1, credit voucher dated 11.12.1986 as Ex. PW-46/2, cheques no. 76702 to 76705 dated 12.12.1986 for a sum of Rs. 10 lacs each as Ex. PW-46/3 to Ex. PW-46/6, cheque no. 076701 dated 13.12.1986 for a sum of Rs. 10 lacs as Ex. PW-46/7, cheque no. 076715 dated 13.12.1986 for a sum of Rs. 5 lacs as Ex. PW-46/8, 8 cheques bearing no. 076706 to 076713 out of which 7 cheques are of Rs. 10 lacs each and last cheque is of Rs. 5 lacs totaling Rs. 75 lacs are Ex. PW- 46/9 to Ex. PW-46/16, 8 Credit Vouchers dated 15.12.1986 as Ex. PW-46/17 to Ex. PW-46/24, cheque no. 076718 for Rs.2 lacs, self drawn as Ex. PW-46/25, cheque CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 29 OF 169 30 no. 076719 for Rs. 10,000/- in favour of S.K. Chopra as Ex. PW-46/26, credit voucher dated 21.12.1986 of M/s. Keming Tools Co. Ltd. Amounting to Rs. 75 lacs dated 21.12.1986 as Ex. PW-46/27, entry pertaining to attendance of PW-46 w.e.f. 11.12.1986 to 18.12.1986 at page no. 46 of the attendance register of State Bank of Patiala, Janak Puri Ex. PW-27/B as Ex.
PW-46/28, seizure memo dated 28.07.1988 as Ex. PW-46/29, account opening form in the name of M/s. Khatau Engineering Services Pvt. Ltd. as Ex.PW- 46/30 and Ledger sheet pertaining to account no. 255 as Ex. PW-46/31 (D-58).
❏ PW-47 is Sh. S. Neelakanthan. He exhibited Seizure Memo dated CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 30 OF 169 31
22.02.1988 as Ex. PW-47/1, Account statement w.e.f. 01.01.1988 to 06.02.1988, letter no. IB 223;7990 DATED 20.12.1986, copy of letter no. BMOIFD 87; 2282 dated 24.12.1986, letter dated 18.07.1986, letter dated 12.08.1987, letter dated 19.08.1987, letter dated 22.09.1987, letters dated 29.09.1987, 01.1.1987, 08.10.1987 and 12.12.1986 as Ex. PW-47/2 (colly.), process cum recommendation document dated 10.02.1986 as Ex. PW-47/3, certified copy of sanction letter dated 02.04.1986 as Ex. PW-47/4, letter dated 09.04.1986 as Ex. PW-47/5, document namely 'Form of Personal Guarantee for Advances and Credits Generally' dated 01.09.1986 and 23.10.1984 as Ex. PW-47/6 (colly. ), CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 31 OF 169 32 document namely 'Form of Personal Guarantee for Advances and Credits Generally' dated 28.09.1984 as Ex. PW- 47/7 and document namely 'Form of Personal Guarantee for Advances and Credits Generally' dated 01.09.1986 as Ex. PW-47/8.
❏ PW-48 is Sh. D.N. Ghosh.
❏ PW-49 is Sh. V.K. Shrivastava. He exhibited Credit Authorization Scheme Sanction of Term Loans / Deferred Payment Guarantee dated 27.04.1985 as Ex. PW-49/1.
❏ PW-50 is Sh. R.C. Gupta.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 32 OF 169 33 ❏ PW-51 is Sh. Jageshwar Dayal.
❏ PW-52 is Sh. Narinder Mohan Nayyar. He exhibited Seizure Memo / Document Handing Over Memo dated 04.04.1988 as Ex. PW-52/1.
❏ PW-53 is Sh. R.K. Anand. He exhibited letter dated 29.07.1987 (D-124) as Ex. PW-53/1, manifest of flight IC 186 from Delhi to Bombay as Ex. PW-53/2., manifest of flight IC 403 as Ex. PW-53/3. ❏ PW-54 is Sh. Nikhil Chander Harshad Lal Vyas. He exhibited Seizure Memo dated 22.02.1988 as Ex.PW-54/1 (D-250), Statement of Repayment of Loan to State Bank of Patiala prepared by M/s. Keming CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 33 OF 169 34 Tools Co. Ltd. As Ex.PW-54/2 (D-251), letter dated 23.10.1986 as Ex. Pw-54/3, Hundi No. 09/86 dated 10.11.1986 issued by M/s. Keming Tools Co. Ltd. In favour of Bank of India as Ex. PW-54/4, letter dated 20.10.1986 as Ex. PW-54/5.
❏ PW-55 is Sh. N.K. Kaushal. He exhibited seizure memo dated 15.07.1987 as Ex. PW-55/1.
❏ PW-56 is Smt. R. Koparkar.
❏ PW-57 is Sh. A.L. Narsimhan. He exhibited application for grant of loan from State Bank of Patiala as Ex. PW-57/1 (D-
29), promissory note as Ex. PW-57/2, agreement for cash credit as Ex. PW-57/4 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 34 OF 169 35 (D-34), cheques Ex. PW-57/7, Ex. Pw- 57/8 and specimen handwriting and signature as Ex. PW-57/9.
❏ PW-58 is Sh. Alok Sabharwal. He exhibited demand promissory note as Ex. PW-58/1 (D-31), Guarantee Form as Ex.
PW-58/2 (D-32), agreement for hypothecation as Ex. PW-58/3 (D-33), voucher dated 13.11.1986 as Ex. PW-
58/4 (D-227) and voucher dated 29.10.1986 as Ex. PW-58/5 (D-228). ❏ PW-59 is Sh. V.K. Nayyar. He exhibited seizure memo dated 24.06.1987 as Ex.
PW-59/1 (D-74) and Stamp Vendor Register as Ex. PW-59/2 (D-75). CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 35 OF 169 36
❏ PW-60 is Sh. S. Srinath. He exhibited cheque no. 151735 dated 16.12.1986 for Rs. 10 lacs as Ex. PW-60/1.
❏ PW-61 is Sh. N.C. Sood. He exhibited letter dated 29.07.1988 as Ex. PW-61/1, opinion dated 01.02.1989 as Ex. PW-
61/2, reasons as Ex. PW-61/3, supplementary opinion dated 15.03.1990 as Ex. PW-61/4 (D-335) and reasons as Ex. PW-61/5.
❏ PW-62 is Sh. S.R. Aggarwal. He
exhibited Seizure Memo dated
16.07.1987 as Ex. PW-62/1 (D-78), note dated 04.12.1986 as Ex. PW-62/2 (colly.), Production Memo dated 21.07.1987 as Ex. PW-62/3 (D-85), passenger air ticket CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 36 OF 169 37 dated 03.12.86 and14.12.86 as Ex. PW
-62/4 to Ex. PW-62/6 (D-86 to D-88), receipt memo dated 21.10.1987 as Ex. PW-62/7 (D-89), documents produced by S.C. Verma as Ex. PW-62/8 (colly.) (D-90 to D-92), production memo dated 16.06.1987 as Ex. PW-62/9 (D-93), statement of account of Bank of Tokyo as Ex. PW-62/10 (D-94), letter dated 03.11.1987 as Ex. PW-62/11 (D-114), Seizure Memo dated 24.11.1987 as Ex. PW-62/12 (D-119), bills produced by Sh. N.H. Vyas as Ex. PW-62/13 (colly) (D-
120/1 to D-120/8)
❏ PW-63 is Sh. Ram Murti, IO who has
conducted the part investigation of this case. He exhibited seizure memo dated CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 37 OF 169 38 01.03.1988 as Ex. PW-63/1 (D-121), seizure memo dated 02.02.1988 as Ex. PW-63/2 (D-130), personal bond dated 01.02.1988 as Ex. PW-63/3 (colly) (D-
136). Letter alongwith enclosures dated 02.03.1988 as Ex. PW-63/4, seizure memo dated 20.02.1988 as Ex. Pw-63/5 (D-138), Seizure Memo dated 21.04.1988 as Ex. PW-63/6 (D-196), seizure memo dated 11.07.1988 as Ex. PW-63/7 (D-
241), Seizure Memo dated 01.08.1988 as Ex. PW-63/8 (D-247), seizure memo dated 07.10.1988 as Ex. PW-63/9 (D-
270), seizure memo dated 28.10.1988 as Ex. PW-63/10 (D-299) and letter dated 29.11.1988 as Ex. PW-63/11 (D-309). CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 38 OF 169 39 ❏ PW-64 is Sh. A.G. Karve. He exhibited Receipt Memos dated 31.05.1988 and 02.06.1988 as Ex. PW-64/1 (D-230) and Ex. PW-64/2 (D-233).
❏ PW-65 is Sh. A.K. Hargava who
conducted search at the residential
premises of accused S.K. Chopra
(deceased) at C-37, Kirti Nagar, New Delhi on 11.06.1987.
❏ PW-66 is Sh. Charanjeet Singh who conducted search at the office of M/s. Keming Tools Co. Ltd. At 4th Floor, Laxmi Building, Malad Estate, Mumbai on 11.06.1987. He exhibited search list dated 11.06.1987 as Ex. PW-66/1.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 39 OF 169 40
11. After conclusion of prosecution evidence, statement of accused persons under section 313 Cr. P. C has been recorded. Accused persons have denied their involvement in the commission of offences and stated that they have been falsely implicated in this case.
12. All the accused persons wished to led defence evidence and examined 2 witnesses in all in their defence.
❏ DW-1 is Sh. Arvind Kochhar. He exhibited the relevant entries of the ledger of account of M/s. Keming Tools Co. Ltd. as Ex. DW-1/1 and Ex. DW-1/2. He also exhibited letter for settlement dated 28.08.2006 as Ex. DW-1/3, letter of settlement dated 07.09.2006 as Ex. DW- 1/4, letter dated 04.11.2006 as Ex. DW- 1/5, letter dated 24.11.2006 as Ex. DW-
1/6 and No dues certificate dated
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 40 OF 169
41
19.12.2006 as Ex. DW-1/7.
❏ DW-2 is Sh. Mahavir Prasad Gupta
(AR of accused company M/s. Keming Tools Co. Ltd.). He exhibited De-
Registration Order dated 24.11.2011 vide which M/s. Keming Tools Co. Ltd. was declared a sick company as Ex. DW-2/1.
13. Sh. V.K. Pathak, Ld. PP for CBI has contended that accused C.V. Madan in furtherance of criminal conspiracy hatched by him along with co accused has advanced a loan of Rs. 3.75 Crores to accused M/s. Keming Tools Co. Ltd. without any sanction or authorization. He further contended that accused C.V. Madan has taken a plea that he granted the loan of Rs. 3.75 Crores on the basis of note of Sh. N.G. Sardana dated 04.12.1986. Ld. Prosecutor contended that defence of the accused is not CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 41 OF 169 42 tenable for the simple reason that firstly, Sh/. N.G. Sardana had never written any note dated 04.12.1986, and same is a forged one. He further contended that Sh. N.G. Sardana had made the note dated 04.12.1986 even then Sh. N.G. Sardana who was General Manager (Operations) as per accused was not competent to sanction loan to the tune of Rs. 3.75 Crores because such loan could have been sanctioned only by the Board of Directors of State Bank of Patiala with the concurrence of State Bank of India and Reserve Bank of India. He further contended that accused C.V. Madan has not only granted loan of Rs. 3.75 Crores without any sanction or authorization but allowed to withdraw the substantial portion of the said loan amount in between 12.12.1986 to 18.12.1986. He further contended that accused H.S. Nageshwaran was the Authorized Signatory of the current account no. 254 which was opened in the State Bank of Patiala, Janakpuri Branch in which fraudulent money was CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 42 OF 169 43 transferred and accused H.S. Nageshwaran withdrew substantial amount from the said account by issuing various cheques. Ld. Prosecutor submitted that the prosecution has placed on record sufficient material to show that all the accused persons have committed offence charged against them in furtherance of their criminal conspiracy and has caused pecuniary gain to themselves and corresponding pecuniary loss to State Bank of Patiala, Janakpuri Branch.
14. Sh. S.P. Minocha, Ld. Counsel for accused C.V. Madan has contended that loan of Rs. 3.75 Crores was sanctioned by Sh. N.G. Sardana who was working as General Manager (Operations) in the Head Office of State Bank of Patiala. He further contended that Sh. N.G. Sardana had wrote a letter dated 04.12.1986 in this regard and accused C.V. Madan has only complied with said letter and has released loan amount on the basis of sanction order dated 04.12.1986. He further contended CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 43 OF 169 44 that as per Clause 13 of the circular Ex. PW-13/D2, whenever any order is given by the higher authority to the lower authority, the lower authority shall presume that higher authority has taken a due approval for the loan. He further contended that the loan transaction was a genuine transaction and accused C.V. Madan has only disbursed the loan amount on the directions of Sh. N.G. Sardana. He further contended that the prosecution has not placed any material to show that note dated 04.12.1986 was a forged one or was not written by Sh. N.G. Sardana. He further contended that State Bank of Patiala had realized most of the amount and even a settlement was arrived between State Bank of Patiala and M/s. Keming Tools Company pursuant to which settled amount was paid by M/s. Keming Tools Company, therefore, there is no pecuniary loss to State Bank of Patiala. Ld. Counsel for accused C.V. Madan contended that prosecution has not placed any material on record to prove the charge framed CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 44 OF 169 45 against accused C.V. Madan.
15. Sh. Atul Babasaheb Dakh, Ld. counsel for accused H.S. Nageshwaran contended that accused H.S. Nageshwaran has acted only on the basis of resolution passed by M/s. Keming Tools Co. Ltd. He further contended that accused has acted only under the instructions of accused S.C. Khatau (deceased) being under service of M/s. Keming Tools Company. As per Ld. Counsel for accused, accused H.S. Nageshwaran has not committed any offence nor any proof has been placed against him by the prosecution.
16. Sh. Sharad Malhotra, Ld. Counsel for M/s. Keming Tools Company has contended that the company had approached State Bank of Patiala, Janakpuri Branch for grant of loan which was sanctioned in its favour and loan amount was debited in their account. He further contended that M/s. Keming Tools Company has repaid the substantial portion of the loan amount even before CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 45 OF 169 46 filing of the charge sheet and remaining amount was paid as per settlement arrived between State Bank of Patiala and M/s. Keming Tools Company. As per Ld. Counsel, no pecuniary loss has been caused to State Bank of Patiala, Janakpuri Branch and therefore M/s. Keming Tools Company has not committed any offence.
17. I have heard Sh. V.K. Pathak, Ld. PP for CBI, Sh.
S.P. Minocha, Ld. Counsel for accused C.V. Madan, Sh. K.K. Patra, Ld. Counsel for accused H.S. Nageshwaran and Sh. Sharad Malhotra, Ld. Counsel for M/s. Keming Tools Co. Ltd., I have also perused the charge sheet, statement of witnesses recorded in the Court, documents and other material placed on record.
18. Accused persons have been charged for the offence punishable u/s 120B IPC r/w Section 420, 471 and 419 IPC and Section 5 (2) read with section 5 (1) (d) of the Prevention of Corruption Act, 1947 and substantive offences thereof. The relevant provision of section 120A CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 46 OF 169 47 of IPC which defines criminal conspiracy is reproduced as under:-
"120A. Definition of criminal
conspiracy.- When two or more
persons agree to do, or cause to be
done,-
(1) an illegal act, or
(2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement s done by one or more parties to such agreement in pursuance thereof.".
19. The accused persons have also been charged under section 5 (1)(d) of the Prevention of Corruption Act, 1988 which read as under:-
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 47 OF 169 48 Section 5 (1) & 5 (2) of the Prevention of Corruption Act, 1947 reads as under:-
"(1) A Public servant is said to
commit the offence of criminal
misconduct;
(a) to (c) .........
(d) If he by corrupt or illegal
means or by otherwise abusing his
position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage;
or
(e) ------
(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less then one year but which may extend to seven years and shall also be liable to fine."
20. Accused persons have also been charged for the offence of cheating punishable u/s 420 IPC as well as u/s 471 IPC. The term cheating has been defined in section CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 48 OF 169 49 415 IPC which reads as under:-
415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, ad which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
Section 471 of IPC is reproduced as under:-
471. Using as genuine a forged [document or electronic record].-
Whoever fraudulently or dishonestly uses as genuine any [document or electronic record] which he knows or CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 49 OF 169 50 has reason to believe to be a forged [document or electronic record], shall be punished in the same manner as if he had forged such [document or electronic record].
21. Accused Pradyuman Kumar Khanna (deceased) was charged u/s 419 IPC. But accused Pradyuman Kumar Khanna (deceased) has died during the pendency of the case.
22. A careful reading of the above provisions makes it absolutely clear that in order to constitute criminal conspiracy as defined u/s 120A IPC, the prosecution is required to prove that two or more persons have agreed to do or cause to be done an illegal act or an act which is not illegal by illegal means.
23. To bring home the guilt of accused persons u/s 5 (1) (d) of the Prevention of Corruption Act, the prosecution is required to establish that the accused public servants by corrupt or illegal means obtained CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 50 OF 169 51 pecuniary advantage or valuable thing for themselves or for any other person without any public interest.
24. The offence of cheating can be committed in either of the two ways described in Section 415 IPC. Deceiving a person common in both the ways of cheating. A person deceived may be fraudulently induced to deliver any property by any person. The person deceived may also be intentionally induced to do or omit to do anything which he would not have done if not deceived and which act of his caused or likely to cause damage or harm in body, mind, reputation or property.
25. To bring home the guilt of the accused persons u/s.
471 IPC, the prosecution is required to prove that accused persons have used a forged document as genuine fraudulently or dishonestly.
26. The prosecution has taken a plea that accused C.V. Madan who was working as Branch Manager in State Bank of Patiala, Janak Puri Branch had committed CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 51 OF 169 52 fraud of Rs. 3.75 Crores by releasing the said amount into the account of accused M/s. Keming Tools Co. Ltd. fraudulently and dishonestly. Accused C.V. Madan in furtherance of his criminal conspiracy with other accused persons opened current account no. 254 in the name of M/s. Keming Tools Co. Ltd. On 11.12.1986 and had released loan of Rs. 3.75 Crores in the said account without any appraisal and sanction of the said loan by the competent authority. As per the prosecution, accused C.V. Madan had released Rs. 3.75 Crores on the basis of forged note dated 04.12.1986 of Sh. N.G. Sardana.
27. In order to substantiate the said plea, prosecution has examined PW-2 Baldev Raj Gandhi who briefly deposed in his examination in chief that:-
During the year 1986, he was posted as Desk Officer (Advances), Regional Office of State Bank of Patiala. Letter Ex. PW- CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 52 OF 169 53 2/A1 was received in their Regional Office on 17.12.1986. Said letter was addressed to the Zonal Manager. He further deposed that when they received this letter on 17.12.1986 no proposal of advance of loan of Rs. 3.75 Crores was pending with them pertaining to M/s. Keming Tools Co.
Ltd. The advancement of loan of Rs. 3.75 Crores was neither within the jurisdiction of Regional Office nor within the Zonal Office of the bank. Only Head Office of State Bank of Patiala situated at Patiala was competent to consider / process the proposal of such loan. He further stated that at that time the financial power of Regional Manager was to sanction loan upto RS. 15 lacs.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 53 OF 169 54
28. During cross-examination PW-2 briefly deposed that:-
No security / charge document was there with the letter. He further stated that he does not remember if this letter was also accompanied by a note prepared by Mr. Sardana who was General Manager (Operations). He admitted that he had written note on Letter Ex. PW-2/A-1 after going through the contents of the same. He further admitted that as per the circular, the lower functionary will presume that higher authority has obtained the sanction of appropriate authority in regard to the matter which are not within his competence. He further stated that Bridge Loan is given to bridge the cost difference between the project CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 54 OF 169 55 cost given initially and escalated cost at a late stage. Bridge loan cannot be granted without the project. He denied that any loan released before the proper sanction is also called bridge loan.
29. The Prosecution has also examined PW-6 Sunil Kumar Khanna who briefly deposed in his examination in chief that:-
Search was conducted at the residence of accused C.V. Madan at Vikas Puri. A search list dated 17.06.1987 Ex. PW-6/A was prepared which bears his signature. PW-6 has not been cross-examined by the Ld. Counsel for the accused. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 55 OF 169 56
30. The Prosecution has also examined PW-13 S.M. Mehra, the complainant of the case, who briefly deposed in his examination in chief that:-
Administrative control on Janak Puri Branch of State Bank of Patiala was of Regional Office in Delhi. In the year 1986 accused C.V. Madan was the Branch Manager of State Bank of Patiala, Janak Puri. He further deposed that proposal for loan of Rs. 3.75 Crores was required to be processed at Credit Appraisal Department of State Bank of Patiala, Head Office, Patiala. He further deposed that when his AO compared the figures of two consecutive weekly statements of Janakpuri Branch of State Bank of Patiala he found a sudden spurt in the figures of deposit and advances. He immediately CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 56 OF 169 57 brought it to his notice. Then he wanted to verify how there was a spurt in advances and deposits and he went to the Janakpuri Branch of State Bank of Patiala. When he visited, the branch, accused C.V. Madan was not present in the Branch. He called the books of Accounts, Loan Ledger and Current Account Ledger and when he was perusing these documents accused C.V. Madan came there. Accused informed him that M/s. Keming Tools Ltd was a group company of very big industrial house of Bombay, he further informed that he thoroughly examined the antecedents about the promoters of the company and it was a very safe advance which was Rs.3.75 crores. He further deposed that CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 57 OF 169 58 this high amount of advance could not have been given by the Branch Manager i.e. accused C.V. Madan to M/s. Keming Tools Company without permission of the Head Office. The application for such loan amount along with the data should have been filed by the party in the concerned branch and that branch could either send it to the Regional Office or to the Credit Appraisal Department of Head Office without the intervention of Regional Office and Zonal Office, because of the availability of the expertise at the Head Office at Patiala, the loans are to be put up before the Chief Manager of the Credit Appraisal Department and he will send his recommendation to the Authority i.e. Managing Director through General CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 58 OF 169 59 Manager (Operations) and Chief General Manager. The MD will put up the proposal before the Executive Committee of the Board of Directors of State Bank of Patiala and if approved, the head office will send it to the Reserve Bank of India for their approval and subsequent disbursement under the credit authorization scheme of the Reserve Bank of India. He further stated that he asked accused C.V. Madan as to whether he has taken the sanction of Head Office but he could not produce any sanction order / letter about the disbursement of the loan of Rs. 3.75 Crores. He further stated that he immediately got in touch with Chief Manager (Credit Department) at the Head Office and he was informed that Head CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 59 OF 169 60 Office has not sanctioned any such loan. He further deposed that on the next day Chief Vigilance Officer Sh. N.K. Kaushal and Sh. V.P. Kumar and Zonal Manager Sh. Prabhu Dayal came as a team and they went to Janakpuri Branch. All books of accounts having bearing on the case in question were perused by the Vigilance Officer and they instructed the branch manager not to make any further disbursement and further ordered that no withdrawals should be allowed in the account. The team thought it fit to recover the amount from the party as far as possible, so they decided to leave one team at the branch and Zonal Office and senior officers including him and CVO and Zonal Manager decided to go to Bombay CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 60 OF 169 61 to contact the party. They also took accused C.V. Madan along with them. On reaching Bombay CVO and Zonal Manager met Mr. Khatau in office of the said company and they admitted having taken the said loan when entire thing was explained to them. Mr. Khatau assured them all cooperation and promised to repay the loan in due course. Then they returned to Delhi. He further deposed that he informed about the fraud to his Zonal Manager and CVO and they contacted the CBI.
31. During cross-examination PW-13 briefly deposed that:-
He did not come across loan application made by Kemming Tools Company for the advance of loan during the course of CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 61 OF 169 62 enquiry, however, he had come across the loan document executed by Keming Tools Company. He further deposed that loan application (D-29) is the application for loan by M/s. Keming Tools Company, Bombay submitted to the Bank on the printed format. He volunteered that it is an application meant for small loan and is not an application for regular loan. He admitted that vide this application loan of Rs. 5 Crores was applied by M/s. Keming Tools Ltd. He further deposed that vide letter Ex. Pw-2/A2, the proposal for sanctioning of loan of Rs. 3.75 Crores by Janakpuri Branch was sent to Chief Manager, Credit and Appraisal Department, Head Office, Patiala. He further deposed that Circular Ex. PW- CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 62 OF 169 63 13/D2 had been issued by their Head Office regarding the revised scheme of delegation of financial powers among the officers. He further deposed that as per para 13 of Ex. PW-13/D2, the lower functionary upon orders of the higher authority will presume that higher authority has obtained sanction of the appropriate authority in regard to the matters which are not within his competence. He further deposed that this refers to the pecuniary power. He denied that where the loan amount is not more than Rs.500 lacs, approval of RBI was not required. He further stated that approval of RBI was required for any type of loan if the amount was exceeding Rs. 200 lacs. He further deposed that bridge loan is a CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 63 OF 169 64 loan which is given on temporary / interim basis. He further stated that he cannot say if Mr. N.G. Sardana was also working as GM (Operations). He volunteered that he was working as General Manager (Planning & Development). He further deposed that all loan proposals are received at the branches and the Branch Manager after satisfying himself recommend the loan to the higher authorities i.e. Regional Manager or Zonal Manager or Head Office in case the loan sought is beyond his power. He admitted that accused C.V. Madan has granted loan beyond his powers and without proper sanction. He further stated that General Manager (Operations) also deals with loans. He further stated that if the CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 64 OF 169 65 Head Office instructs a particular branch to disburse a sanctioned loan to a particular borrower, the Branch Manager, if satisfied can disburse the loan and if he is not satisfied, he can refuse to disburse the loan. He denied that the loan was disbursed on the written note by N.G. Sardana and said note has been deliberately withheld from prosecution.
32. The prosecution has also examined PW-20 Sh.
J.K. Gupta who was posted as officer in Credit Appraisal Department of State Bank of Patiala at Head Office, Patiala during the year 1986. PW - 20 briefly deposed in his examination in chief that:-
A bridge loan is an interim loan sanctioned for immediate use till the disbursement of sanctioned term loan. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 65 OF 169 66 Bridge Loan is sanctioned by the financial institution. There is no limit of Bridge Loan but generally it is not allowed up to the full amount of term loan. He further deposed that the appraisal officer at head office normally did not visit the company, or any of its assets. The verification of the assets is the duty which lies at the branch level. He further deposed that in case of loan exceeding Rs. 2 crores statutory approval of State Bank of India, Central Office was also required and obtained by Credit Appraisal Department, under State Bank of India Subsidiary Bank General Regulations Act, 1959. In case of loan exceeding Rs. 1 Crore approval of Reserve Bank of India was also required under Credit Authorization Scheme. He CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 66 OF 169 67 further deposed that the procedure for the loan of Rs. 3,75,00,000 /- at that time would be that application of the applicant along with various documents, financial statement etc. will be forwarded by the branch manager along with his recommendations to Credit Department at Head Office, Patiala. There it will be marked to one of the desk officer by the Chief Manager and the desk officer will process the same, obtain further information if any required by him for processing. Thereafter he would prepare a note for the loan for being put up to the competent Authority in whose power the sanction of loan vests through Chief Manager. He further deposed that although he does not recollect exactly as CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 67 OF 169 68 to who was the Competent Authority but it would not be less than Executive Committee of Board of Directors.
33. During cross-examination, PW-20 briefly deposed that:-
The power relating to grant of loan by a functionary are prescribed and circulated by way of circular issued by the Head Office. He was put a question that "In acting upon the order of higher authorities, lower functionaries will presume that the higher authority has obtained the sanction of appropriate authority in regard to matter which are not within his competence. What have you to say?"
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 68 OF 169 69
34. The said question has been answered by PW-20 that:-
"It is true if the higher authority is appropriate authority and in case of a loan the sanction refers to the application". He further deposed that N.G. Sardana was posted as GM at Head Office in State Bank of Patiala in December 1986. He does not recollect exactly what portfolio he was holding in December 1986. He further deposed that at that time GM (Planning) and GM (Operations) could sanction the loan if put up by the appropriate authority and if vests in their power. He admitted that the borrower could directly discuss orally with the senior officers in the Head Office about their project.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 69 OF 169 70
35. The Prosecution has also examined PW-30 Sh.
Mangat Rai Goyal who briefly deposed in his examination in chief that:-
He was posted as Private Secretary to General Manager (Planning & Development) during August 1984 and at that time N.G. Sardana was General Manager (Planning & Development). After sometime he was given the charge of General Manager (Operations). After about two years Sh. N.G. Sardana was again posted as General Manager (Planning & Development) but during the entire period he remained as Private Secretary upto April 1987. He further deposed that he does not know who has CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 70 OF 169 71 signed as General Manager (Operations) at point A on letter dated 09.12.1986. The stationary used in the said letter is generally used only for internal notings in State Bank of Patiala, Head Office and Administrative Offices. The communications sent to the branches of State Bank of Patiala are always printed on the letter head of State Bank of Patiala or by way of DO letters specially printed for this purpose.
36. PW-30 has identified the signature of N.G. Sardana on various documents during his examination in chief.
37. During cross-examination PW-30 briefly deposed that:-
"Tour programme Ex. PW-13/DE which CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 71 OF 169 72 bears the signatures of Sh. N.G. Sardana at point A, his designation is mentioned as General Manager (Operations) therein. He volunteered that at that time Sh. N.G. Sardana has been working as General Manager (Planning & Development) but he used the printed proforma of the tour programme on which his designation was mentioned as General Manager (Operations). He denied that the stationary like the one used for the office note mark PW-30/PX-1 is also used by the officer when sending some instructions to branches. He admitted that Ex. PW-13/A is an office note and is typed on the similar stationary as used in the office note dated 04.12.1986 Mark PW- 30/PX-1.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 72 OF 169 73
38. The Prosecution has also examined PW-31 Arun Kumar Mahajan who briefly deposed in his examination in chief that:-
"On 04.12.1986 and 05.12.1986 he had worked on receipt section. At page no. 19 of the Zonal Receipt Register (D-272) Ex. PW-31/C, the entries regarding receipt of Dak which was received on 04.12.1986 and 05.12.1986 are in his handwriting.
However, there is no entry during 04.12.1986 and 05.12.1986 regarding a letter from GM (Operations) in connection with release of amount of Rs. 3.75 Crores to M/s. Keming Tools Company.
39. During cross-examination PW-31 admitted that the dak received form other branches or administrative CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 73 OF 169 74 offices of State Bank of Patiala would not be entered in the register Ex. PW-31/C and Ex. PW-31/E.
40. The Prosecution has also examined PW-40 Harmesh Kumar who was working as cashier cum clerk in Janakpuri Branch of State Bank of Patiala from 31.05.1985 to August 1990. He briefly deposed in his examination in chief that:-
Registered Letter Dispatch Register of State Bank of Patiala, Janakpuri Ex. PW- 40/3 was maintained in regular course of business. At page no. 56 of the said register, there is an entry of dispatch of letter no. 549 on 13.12.1986 addressed to the Regional Manager-I, New Delhi in the matter of M/s. Khatau Groups of Industries - Keming Tools Co. Ltd. Dated 11.12.1986. The said entry is in his handwriting . The said registered letter CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 74 OF 169 75 was sent on 15.12.1986 vide postal receipt for the said registry Ex. PW-22/1.
The original letter dated 11.12.1986 which was entered in the register by him on 13.12.1986 and bears no. 549 is Ex. PW- 2/A-1.
41. During cross-examination, he admitted that:-
The letter dated 11.12.1986 Ex. PW-2/A1 was sent to the post office for the purpose of sending through registered post on 11.12.1986 also. He admitted that letter Ex. PW-2/A-1 could not be sent through registered post on 11.12.1986 as the said letter reached to the post office after 12 O' Clock on that day that is why postal authorities refused to take said letter on CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 75 OF 169 76 11.12.1986 for dispatch.
42. The Prosecution has also examined PW-44 V.P. Kumar who briefly deposed in his examination in chief that:-
In May 1985 he joined the Chief Vigilance Department of State Bank of Patiala. He along with N.K. Kaushal, the then Asstt. General Manager (Vigilance) and H.S. Khanna, the then Head of the Department (DPT) had conducted inquiry against accused C.V. Madan. The inquiry was conducted regarding bridge loan / term loan of Rs. 3.75 crores granted by accused C.V. Madan, Branch Manager, State Bank of Patiala, Janakpuri to M/s.
Keming Tools Company based at Mumbai. After the inquiry they found that CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 76 OF 169 77 the said loan was released by accused C.V. Madan without any sanction from Competent Authority and without any proper documentation. The entire loan amount of Rs.3.75 cores was not released properly because no amount was paid to the supplier as required under the Bank rules. A sum of Rs. 75 lacs was fraudulently transferred.
43. During cross-examination PW-44 briefly deposed that:-
N.G. Sardana was posted as General Manager (Operations) in December 1986 at Head Office of State Bank of Patiala. He further stated that N.G. Sardana being the General Manager (Operations) was competent to deal with loans of every CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 77 OF 169 78 branch of State Bank of Patiala which were under his discretionary power. He admitted that he had made the statement to the CBI that during inquiry they had come across with the photocopy of note dated 04.12.1986 of Mr. N.G. Sardana addressed to accused C.V. Madan. During inquiry they had come across with letter dated 11.12.1986 written by accused C.V. Madan to the Zonal Manager, State Bank of Patiala, New Delhi Ex. PW-2/A1. He admitted that they had come across with an application along with certain documents for release of loan in favour of M/s. Keming Tools Co. Ltd. during their enquiry. He further stated that they did not inquire as to whether Bank Authority had taken any action over the loan application CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 78 OF 169 79 of M/s. Keming Tools Co. Ltd.
44. The prosecution has also examined PW-48 Sh.
D.N. Ghosh who joined as a Chairman of State Bank of India on 13.05.1985, PW-48 has briefly deposed during his examination in chief that:-
Powers to sanction loans are given to different branches as per the status of the Branch. From 1966 there was a special instructions from Reserve Bank of India what was known at that time as 'Credit Authorization Scheme'. This scheme require that any loan by any bank exceeding Rs. 1 Crore has to get prior authorization from Reserve Bank of India. The limit of 1 crore was subsequently enhanced to Rs. 2 Crores but he does not CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 79 OF 169 80 remember as to when it was enhanced. Neither the State Bank of India nor its any subsidiary bank could have granted loan of Rs. 2 crores without prior sanction from the Reserve Bank of India. He further deposed that the branch manager of any bank of State Bank of Patiala has no authority to sanction loan of Rs. 3.75 crores without prior authorization from the State Bank of India and thereafter from the Reserve Bank of India. He further deposed that when any party approaches to any branch manager of State Bank of Patiala then such branch Manager is first required to examine the proposal and if he finds the proposal viable, he should approach to appropriate higher authority and thereafter the said proposal will reach CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 80 OF 169 81 to the head quarters of subsidiary bank. If the headquarter of the subsidiary bank finds the proposal viable then the headquarter had to approach the State Bank of India. In the State Bank of India the proposal is examined again in the subsidiary bank section which is headed by Deputy Managing Director of the State Bank of India. If the proposal then found viable then the State Bank of India sends the said proposal to the Reserve Bank of India for seeking authorization. All these process at least would take 3-4 months and it may take even longer time if some clarifications are asked for. He further deposed that if any branch manager sanctions loan of Rs. 3.75 crores without following the above procedure then such CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 81 OF 169 82 irregularity cannot be regularized subsequently.
45. During cross-examination PW-48 briefly deposed that:-
Ex. PW-13/D1 is general regulation of subsidiary bank, 1959 pertaining to State Bank of Patiala dated 02.02.1984. As per regulation 2 (1) (a), the subsidiary bank can process the loan against security upto Rs. 500 lacs to a company. He volunteered that the the subsidiary bank may process the loan upto any extent but any loan which is beyond Rs. 2 crores has to be processed as per the procedure prescribed by the Reserve Bank of India that is the subsidiary bank has to seek authorization of the State Bank of India as well as the Reserve Bank of India. He CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 82 OF 169 83 denied that for granting loan to a company for beyond Rs. 2 crores, no authorization is required either fro State Bank of India or from the Reserve Bank of India. He denied that the subsidiary bank do not require any approval from State Bank of India or from Reserve Bank of India for granting loan upto Rs. 5 crores.
46. The prosecution has also examined PW-49 Sh.
V.K. Srivastava and PW-50 Sh. R.C. Gupta with regard to the procedure to be followed by the State Bank of Patiala while sanctioning loan beyond Rs.3 Crores.
47. The prosecution has also examined PW-57 Sh.
A.L. Narsimhan who was working with M/s. Keming Tools Company as Assistant General Manager (Operations) during the relevant time. PW-57 has briefly deposed in his examination in chief that:-
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 83 OF 169 84 In the year 1986 M/s. Keming Tools Co. was having a lots of defence orders to complete and therefore the company was in the financial crunch and need of dire financial assistance. He was told by accused S.C. Khatau that State Bank of Patiala in Delhi had offered to provide financial assistance to the company. Sometime in the end of 1986 he met manager of State Bank of Patiala whose complete name he does not remember but his surname was Madan along with Alok Sabharwal probably with Chopra. He further deposed that he briefed the Manager of State Bank of Patiala Mr. Madan regarding various orders which were to be executed by M/s. Keming CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 84 OF 169 85 Tools Co. for which company was looking for financial assistance. Mr. Madan stated that they were looking for a good client and ready to provide help. Mr. Madan stated that he would like to visit Mumbai and would see the working of M/s. Keming Tools Co. Soon thereafter Mr. Madan visited Mumbai, he also came in the factory of M/s. Keming Tools Co. which was situated in Thane. After the visit of factory, Mr. Madan showed his willingness to meet accused S.C. Khatau (deceased) and thereafter he went to meet him in Mumbai. Within a week of visit of Mr. Madan accused H.S. Nageshwaran asked him to visit Delhi to discuss regarding sanction of loan with Mr. Madan. He visited Delhi and met Mr. Madan who CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 85 OF 169 86 conveyed him that some 3 crores plus loan has been sanctioned to M/s. Keming Tools Co. and accused S.C. Khatau (deceased) and accused H.S. Nageshwaran should visit Delhi for execution of document. Within 2-3 days accused S.C. Khatau (deceased) and accused H.S. Nageshwaran arrived in Delhi they stayed in hotel Hyatt in Delhi where he went to meet them. Mr. Madan also arrived in Hotel Hyatt to meet the above named persons. Various documents were signed by accused H.S. Nageshwaran in his presence. He further deposed that the amount of loan was given by Mr. Madan to accused S.C. Khatau (deceased) in the shape of different drafts. Those drafts were handed CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 86 OF 169 87 over by Mr. Madan in the room of accused S.C Khatau (deceased) later on they were conveyed the said fact.
48. During cross-examination PW-57 briefly deposed that:-
He had no idea prior to meeting with the manager of State Bank of Patiala of Mr. Madan that senior officers of M/s. Keming Tools Company have already met with the officers of State Bank of Patiala at Mumbai. He had no idea if senior officers of M/s. Keming Tools Company met the higher officers of State Bank of Patiala at its head office. He had no idea if senior officers of State Bank of Patiala met the higher officers at its head office agreed to grant loan to M/s. Keming Tools Company. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 87 OF 169 88
49. Prosecution has also examined PW-58 Alok Sabharwal who briefly deposed in his examination in chief that:-
On 14.12.1986 Mr. A.L. Narsimhan, General Manager of M/s. Keming Tools Company, Mumbai came to him thereafter accused S.K. Chopra (deceased) also came there. He further deposed that all of three went to State Bank of Patiala, Janak Puri Branch where they met accused C.V. Madan. During discussion accused C.V. Madan conveyed that Khatau Group is a very prestigious group and bank can consider to provide financial assistance but for that purpose he would visit Mumbai Office and also like to meet accused S.C. Khatau. On 09.12.1986 Mr. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 88 OF 169 89 S.K. Chopra told him that accused C.V. Madan had visited Mumbai and every thing had gone in a good manner and they can go ahead. Mr. Narsimhan and accused H.S. Nageshwaran came in Delhi from Mumbai probably on 10/11.12.1986. Prior to that S.K. Chopra told him to buy certain stamp papers from stamp vendor at Parliament Street. He had purchased these stamp papers and visited the State Bank of Patiala, Janakpuri along with S.K. Chopra and same were handed over to accused C.V. Madan. Accused H.S. Nageshwaran and Mr. Narsimhan alongwith him and S.K. Chopra visited State Bank of Patiala, Janakpuri and met accused C.V. Madan. Account opening form and some other documents were CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 89 OF 169 90 handed over to accused C.V. Madan. He further deposed that accused H.S. Nageshwaran stated that accused S.C. Khatau (deceased) was a big man and would not be in a position to visit the bank. Accused C.V. Madan volunteered that he would visit accused S.C. Khatau (deceased) who was staying in hotel Hyatt. He further deposed that accused C.V. Madan reached Hotel Hyatt early evening on 11.12.1986. MR. S.K. Chopra and accused H.S. Nageshwaran had taken accused C.V. Madan to accused S.C. Khatau (deceased). After an hour or so accused H.S. Nageshwaran, accused C.V. Madan, Mr. Narsimhan and S.K. Chopra came in the lobby. Then a discussion has taken place that the loan CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 90 OF 169 91 transaction has been completed and the draft of the said loan were handed over to accused S.C. Khatau by accused C.V. Madan and certain cheques were signed by accused H.S. Nageshwaran for preparation of FDRs. Accused H.S. Nageshwaran handed over those cheques to accused C.V. Madan in the morning of 11.12.1986.
50. During cross-examination PW-58 deposed that:-
It is not in his knowledge that in the discussion held on 11.12.1986 there was reference that Mr. Sardana has considered the matter of grant of loan. He volunteered that the name of Mr. Sardana was not mentioned in the discussion held CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 91 OF 169 92 on 04.12.1986. On 11.12.1986 accused C.V. Madan told them when they met him in the bank that the approval of loan had been obtained by him by MR. Sardana. He denied that he has no knowledge of the discussion which has taken place between accused H.S. Nageshwaran and accused C.V. Madan.
51. An examination of the material produced by the prosecution, including deposition of above witnesses clearly shows that accused C.V. Madan, who was working as Branch Manager of State Bank of Patiala, Janak Puri had released the amount of Rs. 3.75 Crores in current account no. 254 of M/s. Keming Tools Pvt. Ltd on 11.12.1986 as bridge loan. Accused C.V. Madan, who was posted as Branch Manager of State Bank of Patiala, Janakpuri was not competent to sanction loan to the tune of Rs. 3.75 Crores according to prosecution witnesses CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 92 OF 169 93 including PW-48 D.N. Ghosh, who was the Chairman of State Bank of India and has elaborately explained the process of appraisal and sanction of high value loan.
52. The material produced by the prosecution on record unambiguously proves that loan to the tune of Rs. 3.75 Crores could not have been sanctioned by accused C.V. Madan who was working as Branch Manager, (Scale-IV) State Bank of Patiala, Janak Puri. The loan of such amount could have been sanctioned by the Board of Directors of the State Bank of Patiala with the concurrence of State Bank of India as well as of the Reserve Bank of India whose permission was required for any loan beyond Rs. 1 Crores under Credit Authorization Scheme Ex. PW-49/1.
53. Accused C.V. Madan, however, had not obtained any such concurrence either from State Bank of India or from the Reserve Bank of India prior to disbursement of loan of Rs. 3.75 Crores in favour of accused M/s. Keming CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 93 OF 169 94 Tools Co. Accused C.V. Madan not only sanctioned and released the said loan but also allowed transfer of substantial portion of amount from the loan account of M/s. Keming Tools Co. Ltd. by the time the fraud was detected.
54. Sh. S.P. Minocha, Ld. Counsel for accused C.V. Madan has contended that accused C.V. Madan had not sanctioned the loan of Rs. 3.75 Crores. He further contended that the said loan was sanctioned by Sh. N.G. Sardana who was working as General Manager (Operations) in the Head Office, who directed accused C.V. Madan to release the said loan vide his note dated 04.12.1986 Ex. PW-55/D1. He further contended submitted that General Instructions no. 13 of circular Ex. PW-13/D2 issued by Head Office of State Bank of Patiala clearly stipulates that when order is given by the higher authority then the lower authority will presume that higher authority has taken appropriate sanction for disbursement CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 94 OF 169 95 of loan.
55. To appreciate the contention of Ld. Counsel of accused C.V. Madan, it is necessary to examine circular dated 27.05.1985 Ex. PW-13/D2 issued by the Head Office of State Bank of Patiala. Clause no. 6 of this circular talks about total liability clause, which reads as under:-
Total Liability Clause:-
Powers for advances will be subject to ceilings in terms of total liability of each borrower as under:-
Managing Director (i) Rs. 100.00 Lacs for non-
corporate borrowers.
(ii) Rs.200.00 Lacs for corporate borrowers.
Chief General Manager Rs. 100.00 Lacs Rs. 75.00 Lacs Zonal Manager / Chief Manager Rs. 50.00 Lacs (Credit) & Chief Manager, Mall Road, Patiala Branch CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 95 OF 169 96 Regional Managers Rs. 30.00 Lacs Branch Managers Scale - IV Rs.15.00 Lacs Scale - III Rs.10.00 Lacs Scale - II Rs.8.00 Lacs Scale - I Rs.6.00 Lacs Managers of Divisions Scale - IV Rs.10.00 Lacs Scale - III Rs.8.00 Lacs Scale - II Rs.6.00 Lacs Scale - I Rs.4.00 Lacs All the functionaries exercising their delegated powers should ensure that they exercise only those powers which have direct relation to their duties and responsibilities. They should also ensure that each and every instance of the exercise of the powers by them is reported to the controlling authority on the prescribed control return. Non-submission of the necessary control return to the next higher authority entails serious action against the concerned functionary.
56. The circular Ex. PW-13/D2 also contains various general instructions. Accused C.V. Madan has relied upon instruction no.13, which is reproduced herein below:-
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 96 OF 169 97 "General Instruction no. 13 :- In acting upon the orders of the higher authority the lower functionary will presume that the higher authority has obtained the sanction of the appropriate in regard to matters which are not within his competence."
57. Accused C.V. Madan was holding the post of Manager (Scale IV) at the relevant time. A perusal of circular Ex. PW- 13/D2 clearly shows that branch manager of Scale IV was competent to sanction loan only upto Rs. 15 lacs. Any loan beyond the said limit could have been sanctioned by the Competent authority. Accused C.V. Madan was not competent to sanction loan of Rs. 3.75 Crores as per circular Ex. PW-13/D2.
58. The plea of accused C.V. Madan is that he had not sanctioned the loan of Rs. 3.75 crores but the said loan was sanctioned by Sh. N.G. Sardana, vide his order CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 97 OF 169 98 dated 04.12.1986 Ex. PW-55/D1. The prosecution has refuted the said plea.
59. An examination of the material produced by the prosecution on record shows that the plea of accused C.V. Madan that Sh. N.G. Sardana had sanctioned the said loan vide his note dated 04.12.1986 Ex. PW-55/D1, is not correct. No loan to the tune of Rs.3.75 Crores was ever sanctioned by any official of the Head Office of State Bank of Patiala including Sh. N.G. Sardana.
60. If the plea taken by accused C.V. Madan is accepted, even then accused C.V. Madan has no escape because as per accused C.V. Madan, Sh. N.G. Sardana was working as General Manager (Operations) in the Head Office of State Bank of Patiala. Being the General Manager (Operations), Sh. N.G. Sardana was vested with the powers to sanction loan only upto Rs. 75 Lacs or maximum Rs. 100 Lacs as per circular Ex. PW-13/D1. Sh. N.G. Sardana was thus not competent to sanction CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 98 OF 169 99 loan beyond Rs. 1 Crore and such loan could be sanctioned only by the Board of Directors with the concurrence of State Bank of India, and the Reserve Bank of India.
61. Accused C.V. Madan has tried to take the aid of Clause 13 of the Circular Ex. PW-13/D2. But Clause 13 is also of no help to accused C.V. Madan. The implication of clause 13 of Circular Ex. PW-13/D1 is only that if any higher authority has directed for disbursement of loan to lower authority then lower authority would presume that higher authority has obtained sanction from appropriate authority. But, the quantum of loan mentioned in the order of higher authority must fall within the pecuniary competence of such higher authority.
62. If the loan amount which is mentioned in the order of higher authority is not within the pecuniary competence of such higher authority, then lower functionary would not make any such assumption unless lower functionary has CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 99 OF 169 100 obtained the sanction, so granted by the competent authority as per the rules.
63. Sh. N.G. Sardana being the General Manager (Operations) was only competent to sanction loan upto Rs. 75 lacs or maximum Rs. 100 Lacs as per circular Ex. PW-13/D2 and not beyond that. Thus even if the note dated 04.12.1986 Ex. PW-55/D1 is treated as an order of N.G. Sardana then that order was given by an officer who was not competent to sanction loan of Rs. 3.75 Crores, therefore accused C.V. Madan was not correct in assuming that Sh. N.G. Sardana would have obtained the sanction from the higher authorities.
64. A perusal of note dated 04.12.1986 Ex. PW-55/D1 shows that vide that note N.G. Sardana had simply made a request to accused C.V. Madan to accommodate M/s. Keming Tools Company of Khatau Groups to the extent of Rs. 3.25 Crores against the personal guarantee of accused S.C. Khatau (deceased). The relevant portion of CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 100 OF 169 101 the said letter is reproduced as under:-
"I shall be thankful if you could make it convenient to visit Bombay and accommodate M/s. Keming Tools Company Ltd. Of Khatau Groups to the extent of Rs. 3.25 Crores against the personal guarantee of Sh. S.C. Khatau from your Branch"
65. Copy of the note was recovered from the residential premises of accused C.V. Madan during the search conducted at his house. Why accused C.V. Madan was keeping the official record at his house remained unexplained.
66. The language used in note Ex. PW- 55/D1 clearly shows that vide this note a request has been made by the author of the said note to accused C.V. Madan for accommodating M/s. Keming Tools Co. The said note by no stretch of imagination can be termed as an order given CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 101 OF 169 102 by higher functionary of the bank to lower functionary of the bank.
67. The plea of accused C.V. Madan that Sh. N.G. Sardana had ordered him to disburse loan of Rs. 3.75 Crores to M/s. Keming Tools Co. vide Note Ex. PW-55/D1 is false from the face of it. Because the author of note Ex. PW-55/D1 had made a request to accommodate M/s. Keming Tools Co. Ltd. only to the extent of Rs.3.25 Crores, whereas accused C.V. Madan had disbursed loan of Rs. 3.75 Crores, which was never ordered or requested by the author of note dated 04.12.1986 Ex. PW-55/D1.
68. The said fact itself shows that accused C.V. Madan had disbursed the loan of Rs. 3.75 Crores to accused M/s. Keming Tools Co. Ltd. without any sanction or authorization from the higher authorities and without the approval of SBI and the RBI as required under the rules. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 102 OF 169 103
69. The prosecution has placed sufficient material on record to prove that accused C.V. Madan himself had considered the request made on behalf of accused M/s. Keming Tools Co. for grant of loan and had not acted upon the order of N.G. Sardana as claimed by him, which is apparent from the perusal of letter dated 11.12.1986 Ex. PW-2/A1 which was received in Regional Office on 17.12.1986.
70. The letter dated 11.12.1986 Ex. PW-2/A1 shows that accused C.V. Madan had personally satisfied himself with the proposal of M/s. Keming Tools Company for grant of loan. In the said letter accused C.V. Madan himself has mentioned that grant of loan is in the interest of bank. The Language used in said letter itself suggests that accused C.V. Madan has only taken a lame excuse that he was directed by N.G. Sardana to disburse the loan but infact he himself had disbursed the loan to accused M/s. Keming Tools Co. Ltd. without obtaining any CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 103 OF 169 104 sanction from competent authority.
71. It is pertinent to mention that accused C.V. Madan had sanctioned the loan of Rs. 3.75 Crores to Keming Tools Co. Ltd. as a bridge loan. Bridge loan as per its meaning could be granted only against a project. Prosecution witnesses have also categorically deposed that bridge loan could be granted only against a project. But accused M/s. Keming Tools Co. Ltd. had not submitted proposal of any project qua which bridge loan of Rs. 3.75 Crores was sanctioned by accused C.V. Madan. Even in the loan application submitted by M/s. Keming Tools Co. Ltd., the purpose of loan has not been mentioned.
72. The aforesaid facts thus makes it absolutely clear that accused C.V. Madan, who was working as Branch Manager (Scale - IV) in State Bank of Patiala, Janakpuri had disbursed the loan to the tune of Rs. 3.75 crores in favour of accused M/s. Keming Tools Company Ltd. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 104 OF 169 105 Illegally and unauthorizedly without any appraisal or sanction by the higher authority. The said loan was disbursed by accused C.V. Madan in furtherance of his criminal conspiracy hatched by him with M/s. Keming Tools Co. Ltd. and his co-accused, the purpose of which was to cause wrongful loss to the bank and corresponding wrongful gain to himself and his co- accused persons.
73. The plea of the prosecution is that accused C.V. Madan had disbursed the said loan on the basis of forged note of N.G. Sardana Ex. PW-55/D1 dated 04.12.1986. The onus is upon the prosecution to prove that note dated 04.12.1986 Ex. PW-5/D1 was a forged one, which was used by accused C.V. Madan as genuine.
74. To substantiate the said plea, prosecution has examined only PW-30 Mangat Rai Goyal who was the personal secretary of N.G. Sardana during the year 1984 uptill April 1987. After seeing the note dated 04.12.1986, CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 105 OF 169 106 PW-30 has simply stated that he does not know who has signed as General Manager (Operations) at point A on the said note.
75. Besides PW-30 prosecution has not placed any other material on the basis of which it can be concluded that note dated 04.12.1986 Ex. PW-55/D1 was forged one. The prosecution though sought opinion of hand writing expert regarding said note on the basis of admitted signatures of N.G. Sardana but said report has not been proved in the Court in accordance to law.
76. On the basis of sole testimony of PW-30, it cannot be concluded that prosecution has proved on record beyond any reasonable doubt that note Ex. PW-55/D-1 was a forged one, which was used by accused C.V. Madan for disbursing loan of Rs. 3.75 Crores. The prosecution thus could not substantiate the said plea.
77. The Prosecution has further taken a plea that accused C.V. Madan had disbursed the loan in the CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 106 OF 169 107 current account no. 254 of accused M/s. Keming Tools Company Pvt. Ltd. on 11.12.1986. Being the authorized signatory of the said account, accused H.S. Nageshwaran had withdrawn Rs. 3.57 crores from the said account during 11.12.1986 to 18.12.1986. As per the prosecution, accused H.S. Nageshwaran had issued cheque no. 076174 dated 11.12.1986 for Rs. 2.25 crores for issuing drafts in favour of M/s. Keming Tools Co., payable at Bombay. He had also given blank signed cheque no. 076701 to to 076712 for Rs. 10 lacs each and cheque no. 076713 to 076715 for Rs. 5 lacs each totaling Rs.1.30 crores to accused C.V. Madan without mentioning the date and name of the payee and on the basis of these cheques, a sum of Rs. 1.30 crores was disbursed from the account of M/s. Keming Tools Co. by accused C.V. Madan in connivance of accused H.S. Nageshwaran, accused S.K. Chopra (deceased) and accused P.K. Khanna (deceased) during 11.12.1986 to CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 107 OF 169 108 18.12.1986.
78. To substantiate the said plea, prosecution has examined PW-3 Balraj Singh who was working as Branch Manager, State Bank of Patiala, Paschim Puri Branch on 12.12.1986. He briefly deposed in his examination in chief that:-
On 12.12.1986 he received a telephonic call from Sh. A.K. Jain, Accountant of State Bank of Patiala, Janakpuri, who requested him that their branch require cash amount of Rs. 50 lacs - Rs. 60 lacs. He conveyed him that it was not possible to spare that much amount as they had to feed small branches also. Mr. Jain told him that he should talk to their manager Mr. Madan accused no. 1. He further stated that accused C.V. Madan told him that he will have to give Rs. 50 lacs or Rs. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 108 OF 169 109 60 lacs on that day itself as same was urgently required. He told him that they should send requisition slips for smaller amount bifurcating the figure of Rs. 60 lacs. After sometime Mr. Popli, Cashier of Janakpuri Branch came alongwith two guards. He came with requisition slip.
They kept six requisition slips for Rs. 42 lacs which were handed over to him by Mr. Popli. These requisition slips are Ex. PW-3/A1 to Ex. PW-3/A6. He further deposed that payment of Rs. 42 lacs was acknowledged by Mr. Popli on the reverse of these 6 requisition slips by putting his signatures.
79. During cross-examination PW-3 briefly deposed that:-
He cannot tell the denomination of GC CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 109 OF 169 110 notes in which the amount of Rs. 42 lacs was paid to Mr. Popli. He does not know if inter branch cash transfer was insured or not at the time of incident in question. He is also not aware if inter branch cash transfer was necessarily insurable if the amount was exceeding Rs. 10 lacs. He volunteered that at that time it was necessary that one guard must accompany the person who had come to take the cash if the amount was upto Rs. 10 lacs and two guards if amount was more than Rs. 10 lacs. He denied that this amount of Rs. 42 lacs was paid in installments of Rs. 10 lacs each. He denied that accused C.V. Madan did not talk to him or that only Mr. A.K. Jain had talked to him.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 110 OF 169 111
80. The Prosecution has also examined PW-4 Achla Malik, Head Cashier in State Bank of Patiala, Paschim Puri Branch on 12.12.1986. She briefly deposed in her examination in chief that:-
She received six requisition slips Ex. Pw- 3/A1 to A6 for payment from their Branch Manager. accordingly, she made payment of Rs. 42 lacs to Mr. Upender Popli, Cashier of Janakpuri Branch of State Bank of Patiala. All the six entries of the said vouchers are mentioned regarding making payment of Rs. 42 lacs to MR. Upender Popli. PW-4 has not been cross- examined by any of the accused persons.
81. The prosecution has also examined PW-9 Ramesh Chander Chugh who was working as Branch Manager, CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 111 OF 169 112 State Bank of Patiala, Palam Colony, New Delhi. PW-9 briefly deposed in his examination in chief that:-
On 15.12.1986, he received a telephonic call from accused CV. Madan that he would be going on casual leave for one day on that day itself as he had an urgent work at some outside place. He told him that his accountant was not available being on leave and requested him to depute one accountant from his branch to Janakpuri Branch. He further deposed that he told accused C.V. Madan that he had no such permission from Head Office or Regional Office but accused C.V. Madan told him that he will get necessary permission from Head Office / Regional Office and he should send him an accountant. Accordingly he deputed Sh.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 112 OF 169 113 S.C. Verma, Assistant Manager of his branch to Janakpuri Branch on
15.12.1986 vide letter Ex. PW-9/A1.
82. During cross-examination PW-9 briefly deposed that:-
Vide letter Ex. PW-9/C received by him from the Regional Manager, accused C.V. Madan was granted casual leave for one day i.e. for 16.12.1986. He further stated that as per copy of the letter dated 15.12.1986 from accused C.V. Madan addressed to the Zonal Manger, State Bank of Patiala, accused C.V. Madan had requested that he would proceed on leave tomorrow i.e. on 16.12.1986.
83. The Prosecution has also examined PW-10 Sangeeta Gupta who was working as clerk cum typist in CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 113 OF 169 114 State Bank of Patiala, Janakpuri Branch. She briefly deposed that:-
She had opened account no. 5323 in the name of Satish Kumar Ex. PW-10/A. The ledger Sheet of account no. 5323 Ex. PW- 10/D used to be maintained in ordinary course of banking business. The first entry dated 13.12.1986 on Ex. PW-10/D regarding credit of Rs. 5 lacs was entered by her. She further deposed that STDRs Ex. PW-10/E and Ex. PW-10/F were issued in the name of Mohit Chopra and Simi Chopra under the guardianship of S.K. Chopra (deceased).
84. During cross-examination PW-10 briefly deposed that:-
She does not know S.Kumar in whose CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 114 OF 169 115 name the account was opened. The manager signs the document inside his cabin and then it comes to her. She denied that any person can sign a document in the column of Manager.
85. The prosecution has also examined PW-11 Durga Chand who was working as Cashier cum Clerk in State Bank of Patiala, Janakpuri Branch, New Delhi. PW-11 briefly deposed in his examination in chief that:-
Copy of statement of account Ex. PW-11A was prepared by him. As per the statement of account, a sum of Rs. 600/- was debited from the account of one Satish Kumar on account of draft issue charges. He further deposed that as per statement Ex. PW-11/B, the amount of CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 115 OF 169 116 draft was raised by cancellation of STDR. Draft Ex. PW-11/D and Ex.PW-11/E dated 15.12.1986 were issued from State Bank of Patiala, Janakpuri branch payable at Bangalore and both these drafts bear signatures of accused C.V. Madan at point A.
86. During cross-examination PW-11 briefly deposed that:-
Whenever any application for issuance of draft is submitted, it is required to be passed by an authorized officer of the bank and accused C.V. Madan was one of such person.
87. The prosecution has examined PW-12 Sh. A.K. Jain who briefly deposed in his examination in chief that:-
Account no.254 was opened in the name CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 116 OF 169 117 of M/s. Keming Tools Co. on the basis of account opening form Ex. PW-12/D with an initial deposit of Rs. 500/-. The ledger sheet of account no. 254 is Ex. PW-12/F was maintained in the due course of banking business and bears his signature at point A, B, C, D and E. He further deposed that cheque book was issued for account no. 254 bearing no. 076701 to 076750. He further deposed that cheque Ex. PW-12/F-1 dated 11.12.1986 for Rs.
2,25,01,000/- has been passed by accused C.V. Madan. Said cheque has been issued in favour of "Yourself" for preparation of demand draft in favour of M/s. Keming Tools Co. He further deposed that voucher dated 11.12.1986 for Rs. 3.75 Crores already Ex. PW-46/2 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 117 OF 169 118 bears signature of accused C.V. Madan being the Branch Manager of State Bank of Patiala, Janakpuri. He further deposed that application Ex. PW-27/F for preparation of drafts of Rs. 2.25 Crores was given to him by accused C.V. Madan. Amount encircled portion at point X in Ex. PW-27/F was got filled from him by accused C.V. Madan. He further deposed that 25 drafts of Rs. 9 lacs each Ex. PW- 14/E-1 to Ex. PW-14/E-25 bears his signature at point A. PW-12 further deposed that requisition slips already Ex. PW-3/A1 to Ex. PW-3/A-6 bears his signature at point A and signature of Upender Popli at point B vide which Rs. 42 lacs was requisitioned from Paschim Puri Branch into Janakpuri Branch on the CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 118 OF 169 119 instance of accused C.V. Madan through Upender Popli. Upender Popli handed over said amount of Rs. 42 lacs to the head cashier of the branch. He further stated that entries pertaining to the payment of Rs. 40 lacs which is already Ex. Pw-27/M stipulates that the payment was made to accused H.S. Nageshwaran through accused C.V. Madan.
88. During cross-examination PW-12 admitted that:-
If a call is received in branch and sufficient amount is not available then same is requisitioned from the currency chest Branch. He denied that he put his signature over requisition application Ex. PW-3/A-1 to Ex. PW-3/A-6 on his own and CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 119 OF 169 120 without the instructions of accused C.V. Madan. He also admitted that he was not supposed to deal with or see the document pertaining to grant of loan in favour of any party by the head office. He stated that vide application form Ex. PW- 27/F was requested for preparing drafts in respect of an amount of Rs.2,25,00,000/- favouring M/s. Keming Tools Co. He admitted that the amount of Rs.
2,25,00,000/- was to be debited from the account of M/s. Keming Tools for preparation of the above draft. He admitted that 25 drafts of Rs. 9 lacs each Ex. PW-14/E-1 to Ex. PW-14/E-25 were prepared on the basis of application Ex. PW-27/F. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 120 OF 169 121
89. The Prosecution has also examined PW-24 Bansi Lal Shukla, Waterman in State Bank of Patiala, Janakpuri Branch. PW-24 briefly deposed in his examination in chief that:-
Accused C.V. Madan was the Branch Manager in December 1986. He was having a red colour Maruti Car. Mr. A.K. Jain was Accountant during that period. In the evening he had taken out empty trunk (box) from the car of accused C.V. Madan.
PW-24 has not been cross-examined by Ld. Counsel for the accused persons.
90. The prosecution also examined PW-25 Ram Singh who was posted as a guard in State Bank of Patiala, Janakpuri Branch. He briefly deposed in his examination in chief that:-
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 121 OF 169 122 On 12.12.1986 he alongwith MR. Popli and Kartar Singh visited Paschim Vihar Branch in a car. The cash was brought in a box and an attachi case which were duly locked. After coming to Janakpuri branch they kept the cash in the cabin of the Head cashier. Thereafter the box was put in the red car. After that accused Madan left in that car and he returned after 2 or 3 hours. After coming back to the bank accused Madan gave a party to the staff saying that a loan was passed.
91. During cross-examination PW-25 briefly deposed that:-
On that day when he went with Mr. Popli the cash was brought in one trip. He CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 122 OF 169 123 denied that the cash was brought in four trips. He further deposed that Kartar Singh was the other guard who was posted in Janakpuri branch. The box was very big . It may be of approximately of size of 4' x 2-2 ½ ' (Feet). He denied that no box was put in the red car. He denied that accused C.V. Madan had not gone in his car alongwith box.
92. The Prosecution has also examined PW-26 Kartar Singh who briefly deposed in his examination in chief that:-
In December 1986, he alongwith Mr. Upender Popli and Ram Singh went to collect cash from Paschim Vihar Branch. They brought cash in a big steel trunk which was carried in the diggi of the car CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 123 OF 169 124 and an attachi case, which was carried inside the car. They kept the cash in the cabin of Head Cashier. After that , he was sent to nearby post office, Desu Colony for registry.
93. During cross-examination PW-26 deposed that:-
He does not know that cash was brought from Paschim Viihar Branch four times on that day. He stated that he had accompanied the cashier only once.
94. The Prosecution has also examined PW-27 Upender Popli who briefly deposed in his examination in chief that:-
On 15.12.1986 he was called by accused C.V. Madan in his cabin. He gave him 8 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 124 OF 169 125 numbers of cheques for writing dates and names of the payee thereon. He accordingly did so under his own handwriting as per order of Sh. Madan who was at that time his Branch Manager / Controlling Officer. The cheques are already Ex. PW-12/C-1 to C- 8 (D-12 to D-19). He later on handed over those cheques to accused C.V. Madan.
Thereafter accused C.V. Madan called some officials and handed over these cheques to him for transfer to other accounts. Accused C.V. Madan, Branch Manager, called him in his cabin and asked him to write the word "Self" on these four cheques of Rs. 10 lacs each. After taking all these cheques, accused C.V. Madan handed over the cheques to CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 125 OF 169 126 Sh. Surender Gupta for payment.
Cheques are Ex. PW-27/N-9 to Ex. PW- 27/N-12 (colly.) The cash against the respective entries was brought by him alongwith two guards from State Bank of Patiala, Paschim Puri Branch, Delhi on the instructions of Sh. A.K. Jain, Accountant and accused C.V. Madan and thereafter he handed over the same to Head Cashier S.K. Sehgal of Janak Puri Branch who upon receipt of the cash from them made respective entries in the cash scroll register Ex. PW-27/H (colly.) He further stated that on the instructions of Mr. Jain, Rs. 2 lacs were taken out from the total cash and remaining Rs. 40 lacs was taken by accused C.V. Madan in his red colour Maruti Card. The said cash CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 126 OF 169 127 was to be paid to M/s. Keming Tools Co. . He further deposed that aforesaid amount of Rs. 42 lacs was brought in one steel box of Janakpuri branch and in one steel Grey brief case of accused C.V. Madan. He further stated that he had claimed charge for carrying the cash from Paschim Puri Branch to Janakpuri Branch. He further stated that page no. 16 of the register Ex. PW-27/J (Cashier Cash Book) there are four entries for payments of Rs. 10 lacs each from serial no. 9 to 12 are made by Sh. S.K. Sehgal, the then head cashier, whereby payment of Rs. 40 lacs is shown to have been paid to accused H.S. Nageshwaran through accused C.V. Madan. He further stated that accused C.V. Madan called him in his CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 127 OF 169 128 chamber and asked him to write the word "Self" on these four cheques of Rs. 10 lacs each. After taking all these cheques, accused C.V. Madan handed over these cheques to Sh. Surender Gupta for payment. The cheques are Ex. PW-27/N- 9 to N-12 (colly.) (which are already Ex. PW-46/3 to Ex. PW-46/6).
95. During cross-examination PW-27 briefly deposed that:-
He had received Rs. 42 lacs from Paschim Puri Branch vide six entries made in the register of Paschim Puri Branch. He had signed each of the six entries separately. He admitted that as per banking rules an amount of more than Rs. 10 lacs can not be carried in one trip. He CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 128 OF 169 129 further stated that before the slips were filled in by him it was confirmed by Paschim Puri Branch that an amount of Rs. 42 lacs was available with them. He claimed taxi fare for four trips because in one trip an amount more than Rs. 10 lacs was not permissible to be carried. He admitted that the person who carries cash more than Rs. 10 lacs from one branch to another, is in violation of the rules and the person who brings the cash become personally liable in case of any loss during the transit. He volunteered that he had brought the cash under the directions of the then accountant Sh. A.K. Jain and branch Manager accused C.V. Madan. He also admitted that if a self cheque is issued by authorized signatory of the CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 129 OF 169 130 account holder, the person who receives the amount against that cheque signs on the reverse of the cheque in token of having received the cash. He further stated that cheques Ex. PW-27/N-9 to Ex.
PW-27/N-12 dated 12.12.1986 issued as self for Rs. 10 Lacs each only the word "Self" and the date are in his hand and the rest of the body writing on the cheque are not in his hand and was already written. He further stated that amount of Rs. 40 Lacs as mentioned by him in his examination in chief to have been taken by accused C.V. Madan in his red colour Maruti Car which was to be paid to accused no. 6 M/s. Keming Tools Co. was contained in a steel trunk and the brief case. He denied that no amount was CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 130 OF 169 131 taken by accused C.V. Madan in his car which was to be paid to accused no. 6 M/s. Keming Tools Co. Ltd. He further stated that it was a Maruti 800 Car. He does not know that Maruti 800 Car did not have any diggi. He does not know how amount in the trunk and the brief case was taken by accused C.V. Madan. He admitted that in case good account holder withdraws any amount from the bank, the cash is handed over to him in the chamber of the manager also.
96. Prosecution has also examined PW-39 Satish Kumar Sehgal who briefly deposed in his examination in chief that:-
The account no. CA 201 was opened on 28.10.1985. There was no transactions in CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 131 OF 169 132 the said account for a period of six months, therefore, the same was made as inoperative account. He further deposed that cheque no. 190054 dated 21.12.1986 for Rs. 75 lacs Ex. PW-40/3 bears signature of accused C.V. Madan which was issued by M/s. Mutual Finance and Investment in favour of M/s. Keming Tools Co. Ltd.
97. During cross-examination PW-39 briefly deposed that:-
The transaction between M/s. Keming Tools Pvt. Ltd. and M/s. Mutual Finance & Investment regarding transfer of amount inter se between them was a normal banking practice.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 132 OF 169 133
98. The Prosecution has also examined PW-40 Harmesh Kumar who briefly deposed in his examination in chief that:-
Ledger Sheet of M/s. Keming Tools Co. Ltd. In respect of account no. 254 Ex. PW- 12/F contain entry at point A in his hand regarding Rs.2,25,01,000/-. The said amount was debited in the said account for issuance of draft of Rs. 2,25,00,000/-. The application for issuance of said draft is Ex. Pw-27/F. Against said application, 25 drafts of Rs. 9 lacs each Ex. PW-14/E- 1 to E-25 were issued in the name of M/s.
Keming Tools Co. Ltd. The cash deposit of Rs. 5 lacs in account no. 1186 and 1187 both in the name of Mohit Chopra and Simi Chopra children of accused S.K. Chopra (deceased) Ex. PW-27/N1 to Ex. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 133 OF 169 134 PW-27/N4 was filled in by him under the directions of accused C.V. Madan. He further stated that FDR no. 90037 for Rs. 5 lacs was issued in the name of Mohit Chopra under the guardianship of accused S.K. Chopra (deceased) Ex. PW- 10/E and FDR no. 90038 was issued in the name of Simi Chopra under the guardianship of accused S.K. Chopra (deceased) Ex. PW-10/F. He further stated that application dated 15.12.1986 Ex. PW-10/E and Ex. PW-10/F were prepared by him and issued under signature of accused C.V. Madan.
99. During cross-examination PW-40 admitted that:-
When he filled pay in slip Ex. PW-27/N4 and Ex. PW-27/N6 Mr. S.K. Chopra was CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 134 OF 169 135 sitting with accused C.V. Madan. He admitted that it is not unusual that pay in slip, some time are filled in by the bank official on the request of the parties. He admitted that S.K. Chopra was entitled to deal with the FDR in the name of his minor children Mohit Chopra and Simmi Chopra being the legal guardian. He admitted that it is a normal banking transaction that a demand draft is obtained after getting the FDR canceled for similar amount. He also admitted that when the bank drafts as mentioned in ledger account Ex. PW-40/4 and Ex. PW-
40/5 were got prepared from the cancellation of FDRs which were existing then the bank has not suffered any monetary loss in the said transaction. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 135 OF 169 136
100. Prosecution has also examined PW-45 N.S. Sandhu who was posted as Manager (Accounts) at Main Branch of State Bank of Patiala, Bangalore during May 1986 to December 1986. PW-45 briefly deposed in his examination in chief that:-
On 15.12.1986 one MR. Srinath, the employee of Wendnt. (India) Ltd. met him and inquired about the encashment regarding the demand draft which was issued by the Janakpuri Branch, New Delhi of State Bank of Patiala. He explained him regarding the procedure of encashment. He further deposed that on 16.12.1986, Sh. S,K. Chopra and Sh.
Srinath visited his branch alongwith Account Opening Form, Introductory letters and two demand drafts. The account opening Form Ex. PW-45/1 was CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 136 OF 169 137 also containing the two specimen signature cards Ex. PW-45/2A and Ex. PW-45/2B. The introductory letter issued by the Deputy Manager of State Bank of India, C & I Division, Bangalore which contains the specimen signature of Mr. S.K. Chopra and Mr. H.S. Nageshwaran is Ex. PW-45/3. He further stated that he passed an order for opening a saving bank account in the name of S.K. Chopra. After seeing the Account Opening Form, he stated that the account number given to the account of S.K. Chopra was 3167/25. The account was opened by depositing Rs. 50/-. Thereafter, through the pay in slip, Rs. 10 lacs was deposited by S.K. Chopra in his account by pay in Slip Ex. PW-45/4. Said witness has not CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 137 OF 169 138 been cross-examined by the Ld. Counsel for the accused persons.
101. The Prosecution has also examined PW-46 Surinder Gupta who briefly deposed in his examination in chief that:-
Ledger sheet of Current account no. 254 of M/s. Keming Tools Co. Ltd. which has been maintained by him being the employee of the bank which is Ex. PW- 12/F. He had made all the entries in the ledger sheet Ex. PW-12/F except the entry at point A. All entries have been checked by accused C.V. Madan being the Branch Manager under his initials at point B. He further deposed that he had made entry of Rs. 3.75 Crores in the ledger account Ex. PW-12/F at point Y to CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 138 OF 169 139 Y1. The said entry has been made by him pursuant to the Credit Voucher dated 11.12.1986 Ex. PW-46/2. He further stated that cheque no. 76702 to 76705 dated 12.12.1986 for a sum of Rs. 10 lacs each drawn on State Bank of Patiala, Janakpuri are self drawn. All the cheques were debited in account no. 254 of M/s.
Keming Tools Company Ltd. He further deposed that M/s. Keming Tools Co. Ltd. having current account no.254 was issued a cheque book having folio commencing from 076701 to 076750. He further stated that 8 cheques bearing no. 076706 to 076713 out of which 7 cheques are of Rs. 10 lacs each and last cheque is of Rs. 5 lacs thus totaling Rs. 75 lacs. All the cheques are in favour of M/s. Mutual CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 139 OF 169 140 Finance & Investment. All the cheques were cleared by accused C.V. Madan under his signature at point B on each cheque. These cheques are Ex. PW-46/9 to Ex. PW-46/16. The amount of the above cheques were debited into the account of M/s. Mutual Finance & Investment.
102. During cross-examination, PW-46 admitted that to clear a cheque and to pass a cheque by an accountant or by the Manager is a normal banking practice. He also admitted that opening of an account allowed by the manager is a normal banking practice. He deposed that cheque no. 76702 to 76705 dated 12.12.1986 for a sum of Rs. 10 lacs each drawn on State Bank of Patiala, Janakpuri Branch. All the cheques are self drawn. All the cheques were debited in account no. 254 of M/s. Keming CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 140 OF 169 141 Tools Co. Ltd. Cheques are Ex. PW-46/3 to Ex. Pw-46/6.
103. The prosecution has also examined PW-57 Sh.
A.L. Narsimhan who briefly deposed in his examination in chief that:-
Cheque Book Issue Register of State Bank of Patiala Ex. PW-31/B bears the signature of accused H.S. Nageshwaran at point A on page no. 102. Certain cheques were got filled from him by accused H.S. Nageshwaran. As far as he knows these were got filled for preparation of FDs. He further stated that cheques already Ex. PW-46/3 to Ex. PW- 46/9, Ex. PW-46/16, Ex. PW-12/C3 to Ex. PW-12/C7 and the cheque Ex. PW-57/6 have been filled in his handwriting except the column where the name of "Payee" is mentioned. The cheques bear the CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 141 OF 169 142 signature of accused H.S. Nageshwaran at point A. The date of the cheques and the name of payee were done subsequently and not in his presence. He further stated that accused H.S. Nageshwaran told him that these cheques were got filled for preparation of FDs in the name of M/s. Keming Tools Pvt. Ltd.
104. During cross-examination PW-57 admitted that:-
Cheques Ex. PW-46/3 to Ex. PW-46/8 are having the signatures of accused H.S. Nageshwaran a point A on the reverse of the cheques. He further stated that he does not know if the signature at point A on the reverse of cheques Ex. PW-46/3 to Ex. PW-46/8 were done by accused H.S. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 142 OF 169 143 Nageshwaran at the time of receiving the payment. He denied that the above stated cheques were not given for preparation of FD in the name of M/s. Keming Tools Company. He further stated that those cheques were not presented in the bank in his presence. He admitted that accused H.S. Nageshwaran had signed those cheques on the asking of accused S.C. Khatau (deceased). He admitted that Rs. 1.30 Crores was given to accused C.V. Madan for preparation of FDR. He is not aware that those cheques were handed over by accused S.C. Khatau (deceased) to accused C.V. Madan.
105. The Prosecution has also examined PW-58 Sh.
Alok Sabharwal who briefly deposed in his examination in CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 143 OF 169 144 chief that:-
Accused C.V. Madan reached Hotel Hyatt early evening on 11.12.1986. Then a discussion has taken place that the loan transaction has been completed and the draft of the said loan were handed over to accused S.C. Khatau by accused C.V. Madan and certain cheques were signed by accused H.S. Nageshwaran for preparation of some FDRs. Accused H.S. Nageshwaran handed over those cheques to accused C.V. Madan in the morning of 11.12.1986.
106. During cross-examination, PW-58 stated that:-
The cheques were not given to accused C.V. Madan in his presence. The cheques CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 144 OF 169 145 were given for issuance of FDR and not for draft. He denied that no cheques were given for issuance of FDRs.
107. Prosecution has also examined PW-60 S. Srinath who briefly deposed in his examination in chief that:-
He had worked as Manager (Accounts) in M/s. Wendnt (India), Bangalore during the period 1982 to 1988. Accused H.S. Nageshwaran had met him in the month of December 1986, subsequently, accused C.V. Madan and accused S.K. Chopra (deceased) also came from Delhi to Bangalore in their office. Accused C.V. Madan and accused S.K. Chopra (deceased) brought some demand drafts totaling of a sum of Rs. 10 lacs which CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 145 OF 169 146 were to be encashed. All those demand drafts were in the name of accused S.K. Chopra (deceased). He further stated that he visited State Bank of Patiala, Bangalore on the directions of someone and inquired the fact. He was conveyed that Demand drafts cannot be encashed until an account is opened in the name of a person in whose name the demand drafts were. He further stated that M/s. Wendt (India) wrote a letter to the State Bank of India for attesting the signature of accused H.S. Nageshwaran and accused Satish Kumar Chopra (deceased) which was done by the officials of State Bank of India. The signatures of accused Satish Kumar Chopra (deceased) was identified by accused H.S. Nageshwaran and CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 146 OF 169 147 thereafter an account was opened in State Bank of Patiala having its branch at Bangalore in the name of accused Satish Kumar Chopra (deceased). After opening the said account the demand drafts brought by accused C.V. Madan and Satish Kumar Chopra (deceased) were deposited in the said account for encashment. He further deposed that accused Satish Kumar Chopra took a loose Cheque from State Bank of Patiala and issued the said cheque in his own favour for a sum of Rs. 10 lacs and that is how the amount was withdrawn. He further stated that he visited the branch after two hours and collected cash of Rs. 10 lacs from the branch. He brought the said cash amount in his office and handed CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 147 OF 169 148 over the same but he does not remember to whom he handed it over. The said transaction was not mentioned in the book of account of M/s. Wendt (India) Ltd as the said transaction was not related to the said company.
108. PW-60 was declared hostile by the prosecution and Ld. Senior PP for CBI carried out his cross- examination. During cross-examination carried out by Ld. Senior PP, PW-60 admitted that:-
He filled all the documents regarding encashment of demand drafts under the directions of accused H.S. Nageshwaran. He also admitted that he had handed over cash amount of Rs. 10 lacs after taking the same from the bank to accused H.S. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 148 OF 169 149 Nageshwaran. He also admitted that he stated the above fact to the IO in his statement. He also admitted that he went to State Bank of Patiala to collect Rs. 10 lacs in cash on the instructions of accused H.S. Nageshwaran.
109. During cross-examination conducted by Ld. Counsel for accused persons PW-60 stated that:-
He does not remember if he had stated to the CBI that demand drafts brought by accused C.V. Madan and accused S.K. Chopra (deceased) were got deposited in State Bank of Patiala by opening an account in the said branch in the name of accused S.K. Chopra (deceased). He admitted that it is not specifically CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 149 OF 169 150 mentioned in his statement recorded u/s 161 Cr.P.C. that accused C.V. Madan brought the drafts which were deposited in State Bank of Patiala. He denied that accused C.V. Madan had not visited their office at Bangalore alongwith accused S.K. Chopra. He volunteered that accused H.S. Nageshwaran introduced him with accused C.V. Madan in their office. He denied that his statement was formulated by the CBI and subsequently he was asked to state those facts. He volunteered that his statement was got typed in their office by their typist in their office.
110. The prosecution also examined PW-61 N.C. Sood, Hand Writing Expert who has proved his report Ex. PW- 61/2 and Ex. PW-61/4 CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 150 OF 169 151
111. An examination of the testimony of prosecution witnesses and the material placed on record shows that M/s. Keming Tools co. Ltd. was having its current account no. 254 in State Bank of Patiala, Janakpuri Branch which was opened on 11.12.1986 with cash deposit of Rs. 501 vide voucher Ex. PW-12/D which was passed by accused C.V. Madan.
112. A perusal of account opening form Ex. PW-12/D, shows that accused H.S. Nageshwaran, Chief Executive and N.H. Vyas, Financial Controller were the signatories of the said account. On 11.12.1986 itself, a sum of Rs. 3.75 Crores was credited in the said account of M/s. Keming Tools Co. Ltd. vide voucher Ex. PW-46/2 by way of term loan account which was passed by accused C.V. Madan. Entries made in the ledger of current account No. 254 Ex. PW-12/F, clearly shows that amount of Rs. 3.75 Crores was credited into said account on 11.12.1986 and almost entire amount except Rs.17,39,501/- was CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 151 OF 169 152 withdrawn from the said account during 11.12.1986 to 18.12.1986.
113. The Prosecution has placed on record Cheque Book Issue Register Ex. PW-31/B which shows that cheque book containing leaf from 076701 to 076750 was issued to M/s. Keming Tools Co. Ltd which was received by accused H.S. Nageshwaran.
114. Accused H.S. Nageshwaran had issued a cheque bearing no. 076714 dated 11.12.1986 Ex. PW-12/F for a sum of Rs. 2,25,1,000/- for issuing demand draft in favour of M/s. Keming Tools Co. Ltd. payable at Bombay. The said cheque was passed by accused C.V. Madan vide his signatures at point X and on the basis of this cheque, 25 demand drafts of Rs. 9 lacs each dated 11.12.1986 Ex. PW-14/E1 to E25 were prepared in favour of M/s. Keming Tools Co., payable at Bombay by PW-14 Smt. Anita Malik and amount of Rs.2,25,1000/- was debited from the amount of M/s. Keming Tools Co. on 11.12.1986 itself. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 152 OF 169 153
115. The material produced by the prosecution on record shows that accused H.S. Nageshwaran had given cheques no. 076702 to 076705 Ex. PW-46/3 to Ex PW- 46/6 (also Ex. PW-27/9 to Ex. PW-27/12) to accused C.V. Madan. All these cheques were of Rs. 10 lacs each and having signatures of accused H.S. Nageshwaran. Accused C.V. Madan got filled the word "Self" and date, on these cheques from PW-27 Upender Popli who has proved the said fact on record.
116. Accused C.V. Madan also requisitioned Rs. 42 lacs from Paschim Puri Branch through PW-12 A.K. Jain, Accountant and PW-27 Upender Popli and out of Rs.42 lacs cash, Rs. 2 lacs cash was kept in Janakpuri branch and amount of Rs. 40 lacs was taken by accused C.V. Madan in his car for delivering the same to accused H.S. Nageshwaran.
117. Ld. Counsel for accused C.V. Madan has contended that the amount from Paschim Puri Branch CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 153 OF 169 154 was not brought in one go but was brought in four times as reflected in the record produced by the prosecution.
118. The said contention is not sustainable for the simple reason that prosecution witnesses have deposed in unison that cash amount of Rs. 42 Lacs was brought by Upender Popli from Paschim Puri Branch in one go but same was received against 4 requisition slips under the directions of accused C.V. Madan. The amount was not only brought from Paschim Puri Branch but out of that amount, Rs. 40 lacs was taken by accused C.V. Madan for making payment to accused H.S. Nageshwaran which is reflected in the record which has been duly proved by the witnesses.
119. An examination of the material produced by the prosecution also shows that accused S.K. Chopra (deceased) had opened an account no. 5324 with State Bank of Patiala, Janakpuri Branch on 13.12.1986. The said account was opened by depositing Rs. 5 lacs in CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 154 OF 169 155 cash.
120. The prosecution has claimed that said Rs. 5 lacs which was deposited in cash was the proceeds of cheque no. 76715 of M/s. Keming Tools Co. which was a self drawn cheque signed by accused H.S. Nageshwaran and in the said cheque word "Self" was written in the handwriting of accused S.K. Chopra (deceased).
121. The writing of word "Self" at point Q-175 on cheque no. 76715 Ex. PW-46/8 was sent for comparison to GEQD, Shimla. PW-61 NC. Sood has examined the specimen handwriting of accused S.K. Chopra (deceased) with questioned handwritings and submitted his report Ex. PW-61/4 which attribute the writing of word "Self" at portion Q-175 to accused S.K. Chopra (deceased).
122. The opinion expressed by the handwriting expert PW-61 N.C. Sood clearly shows that the word "Self" at point Q-175 on cheque Ex. PW-46/8 was written by none CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 155 OF 169 156 other than accused S.K. Chopra (deceased).
123. It is pertinent to mention that account no. 5323 was opened in the name of accused S.K. Chopra (deceased) by depositing cash amount of Rs. 5 Lacs on 13.12.1986. The self drawn cheque Ex. PW-46/8 was also dated 13.12.1986 on which word "Self" was written by accused S.K. Chopra (deceased) in his handwriting which has been proved by handwriting expert.
124. Perusal of the material produced by the prosecution further shows that an amount of Rs. 10 lacs was withdrawn by self drawn cheque no. 076701 dated 13.12.1986 Ex. PW-46/7 under the signature of accused H.S. Nageshwaran which was passed by accused C.V. Madan. The word self on cheque Ex. PW-46/7 at point Q- 174 was also written in the handwriting of accused S.K. Chopra (deceased) as per handwriting expert report Ex. PW-61/4.
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125. Accused S.K. Chopra (deceased) got prepared 2 FDRs in the name of his children namely Mohit Chopra and Simmi Chopra on 13.12.1986 itself which are Ex. PW-10/E and Ex. PW-10/F. The FDR were for a period of 6 ½ years. The maturity date of these FDRs was 16.06.1993.
126. Accused S.K. Chopra (deceased) however got cancelled these FDRs prematurely on 15.12.1986 itself and after cancellation of these two STDRs, accused S.K. Chopra (deceased) applied for preparation of bank draft for the said amount payable at Bangalore vide application Ex. PW-11/DX.
127. On the basis of this application, 2 drafts dated 15.12.1986 Ex. PW-11/D and Ex. PW-11/E in the name of accused S.K. Chopra (deceased) of Rs. 1 lac and 9 lacs payable at Bangalore were got prepared.
128. These drafts were taken by accused S.K. Chopra CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 157 OF 169 158 (deceased) and accused C.V. Madan to Bangalore, where accused S.K. Chopra (deceased) got opened bank account in his name in State Bank of Patiala, Bangalore on the introduction of accused H.S. Nageshwaran and got encashed these draft and thereafter withdrew the cash proceeds of Rs. 10 Lacs on the same day.
129. Accused C.V. Madan had accompanied accused S.K. Chopra (deceased) to Bangalore as per PW-60 S. Srinath. The said fact also gets support from the testimony of PW-9 Ramesh Chander Chugh who has categorically stated that accused C.V. Madan requested him to depute his accountant in Janakpuri Branch for 16.12.1986 as he was going on a casual leave.
130. The said fact shows that accused C.V. Madan not only allowed termination of two STDRs on 15.12.1986 which were opened in the name of children of accused S.K. Chopra (deceased) only on 13.12.1986 for a period of 78 months. But he also accompanied accused S.K. CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 158 OF 169 159 Chopra (deceased) along with two demand drafts at Bangalore and got deposited those demand drafts in the account of accused S.K. Chopra (deceased) and subsequently accused S.K. Chopra (deceased) withdrew said amount through a self drawn cheque, cash of which was collected by PW-60 S. Srinath.
131. Accused H.S. Nageshwaran who was at Bangalore at that time helped accused S.K. Chopra (deceased) in opening his account at State Bank of Patiala, Bangalore and put his signature as introducer on the account opening form of accused S.K. Chopra (deceased). Accused S.K. Chopra (deceased) opened the said account in State Bank of Patiala, Bangalore and deposited both the drafts and subsequently withdrawn proceeds of said draft vide a self drawn cheque and handed over the cash to some one in M/s. Wendnt (India).
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132. All these facts clearly shows that accused C.V. Madan, accused S.K. Chopra (deceased) and accused H.S. Nageshwaran were part of the criminal conspiracy. Accused H.S. Nageshwaran had handed over blank signed cheques to accused C.V. Madan who used Cheque no. 076701 Ex. PW-46/7 through accused S.K. Chopra (deceased) who got prepared two STDRs from the cash amount of this cheque. Accused S.K. Chopra (deceased) facilitated diversion of said amount from Current account no. 254 of M/s. Keming Tools Co. into the account of his children by getting prepared two STDRs in their name. Accused S.K. Chopra (deceased) got cancelled those STDRs prematurely and got prepared 2 demand drafts in his name payable at Bangalore which he deposited in his account opened in State Bank of Patiala at Bangalore on the introduction of accused H.S. Nageshwaran and ultimately handed over the cash amount to someone in the office of M/s. Wendnt (India) at CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 160 OF 169 161 Bangalore.
133. A perusal of the prosecution witnesses and the documents placed on record also proves that accused H.S. Nageshwaran, who was the authorized signatory of account no. 254 of M/s. Keming Tools Co. Ltd. had handed over bank signed cheque to accused C.V. Madan. Accused C.V. Madan got filled 8 cheques bearing no. 076706 to 076713 Ex. PW-12/C-1 to Ex. PW-12/C-8 (also Ex. PW-46/9 to Ex. PW-46/16) from PW-27 Upender Popli, Cashier of State Bank of Patiala, Janakpuri Branch and vide these cheques a sum of Rs. 75 Lacs was transferred from the account of M/s. Keming Tools Co. Ltd. Into the account of M/s. Mutual Finance and Investment on 15.12.1986.
134. Accused C.V. Madan was given these blank signed cheques by accused H.S. Nageshwaran. Accused C.V. Madan who got filled the name of the payee and date on these cheques from PW-27 Upender Popli and thereafter CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 161 OF 169 162 these cheques were presented for transfer and on the basis of these cheques, an amount of Rs. 75 lacs was transferred from the account of M/s. Keming Tools Co. Ltd. into the account of M/s. Mutual Finance & Investment on 15.12.1986. But, when the fraud was detected by the bank officials, the said amount was transferred back from account of M/s. Mutual Finance & Investment in the account of M/s. Keming Tools Co. vide cheques Ex. PW- 40/3 dated 01.12.1986.
135. The accused persons have taken a plea that no case is made out against them because the transaction was a bonafide loan transaction as per banking norms. They also claimed that no pecuniary loss has been caused to the bank as the entire outstanding amount against M/s. Keming Tools Company Ltd. was repaid on the basis of settlement arrived between the State Bank of Patiala and Mrs. Panna S. Khatau on behalf of M/s. Keming Tools Co. Ltd. Accused persons have relied upon CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 162 OF 169 163 the testimony of DW-1.
136. The plea of accused persons is not sustainable for the simple reason that accused C.V. Madan had disbursed the loan of Rs. 3.75 Crores in favour of M/s. Keming Tools Co. Ltd. without any sanction and authorization from competent authority. The said amount was transferred by accused C.V. Madan illegally and unauthorizedly in furtherance of his criminal conspiracy with other accused persons. The accused persons cannot be exonerated from their criminal liability merely on the ground that money was repaid by the accused persons to the bank after registration of the case.
137. The testimony of DW-1 Arvind Kochhar only shows that M/s. Keming Tools Co. Ltd. had paid Rs. 3.20 Crores to the bank by 20.10.1987. Rs. 50 Lacs was further paid on behalf of M/s. Keming Tools Co. Ltd. as per the settlement on 24.11.2006. Even as per the testimony of DW-1, after making the payment as per the agreement, CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 163 OF 169 164 the State Bank of Patiala had suffered loss to the tune of Rs. 3,59,42,000/-.
138. Thus, the plea of the accused persons that the transaction was a bonafide loan transaction or that State Bank of Patiala had not suffered any pecuniary loss is not correct, same is thus rejected.
139. When all the aforesaid facts and circumstances are taken together cumulatively, then an irresistible conclusion emerges that the prosecution has proved on record beyond reasonable doubt that accused C.V. Madan had disbursed a sum of Rs.3.75 Crores into the account of accused M/s. Keming Tools Pvt. Ltd. without obtaining sanction, approval and authorization from the higher authorities including State Bank of India and Reserve Bank of India.
140. The prosecution has also proved on record that accused C.V. Madan had released a sum of Rs.3.75 Crores in Current Account no. 254 of M/s. Keming Tools CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 164 OF 169 165 Co. on 11.12.1986 itself. The prosecution has also proved on record that accused H.S. Nageshwaran, who was the authorized signatory of current account no. 254 of M/s. Keming Tools Co. Ltd. had withdrawn a substantial amount of Rs. 357.61 Lacs from the said account during 11.12.1986 to 18.12.1986.
141. The prosecution has also proved on record that accused H.S. Nageshwaran had given various blank signed cheques to accused C.V. Madan, who on the basis of those cheques got prepared 25 demand drafts of Rs. 9 Lacs each totaling to Rs.2.25 Crores in favour of M/s. Keming Tools Pvt. Ltd. payable at Bombay. Accused C.V. Madan also got withdrawn Rs. 40 Lacs in cash through 4 self drawn cheques which he got filled from PW-27 Upender Popli and after getting the cash amount from the bank, accused C.V. Madan himself had delivered the cash amount of Rs. 40 Lacs to accused H.S. Nageshwaran.
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142. The prosecution has also proved on record that accused C.V. Madan on the basis of blank signed cheques given by accused H.S Nageshwaran had diverted Rs. 75 Lacs into the account of M/s. Mutual Corporations and Investment. Those cheques were also got filled by accused C.V. Madan through PW-27 Upender Popli.
143. The prosecution has also proved on record that a sum of Rs. 15 Lacs was got transferred from the account of M/s. Keming Tools Pvt. Ltd, on the basis of cheques Ex. PW-46/7 and Ex. PW-46/8, the proceeds of which was used by accused S.K. Chopra (deceased) for opening his account in State Bank of Patiaia, Janakpuri as well as for getting prepared two STDRs in the name of his children. Accused S.K. Chopra (deceased) got canceled those two STDRs prematurely and diverted a sum of Rs.10 Lacs from the account of M/s. Keming Tools Pvt. Ltd. at State Bank of Patiala, Janakpuri to his CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 166 OF 169 167 account in State Bank of Patiala, Bangalore
144. The prosecution has also proved that accused C.V. Madan got prepared two demand drafts Ex. PW-11/D and Ex. PW-11/E from the proceeds of two STDRs Ex. PW- 10/E and Ex. PW-10/F at the instance of accused S.K. Chopra (deceased). Accused C.V. Madan accompanied accused S.K. Chopra (deceased) to Bangalore alongwith two bank drafts, when accused S.K. Chopra (deceased) deposited both these bank drafts in his account which he got opened on the introduction of accused H.S. Nageshwaran and subsequently withdrew the said amount by way of self drawn cheque and handed over the proceed to M/s. Wendnt., Bangalore.
145. In view of the above facts and circumstances, I am of the considered opinion that prosecution has succeeded in proving its case beyond reasonable doubt against accused C.V. Madan, accused H.S. Nageshwaran and accused M/s. Keming Tools Co. Ltd. for the offences CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 167 OF 169 168 punishable u/s. 120 B r/w section 420 IPC and section 5 (2) r/w section 5 (1) (d) of the Prevention of Corruption Act, 1947. Hence all the accused persons are held guilty and convicted accordingly.
The prosecution has also succeeded in proving its case beyond reasonable doubt against accused C.V. Madan, accused H.S. Nageshwaran and accused M/s. Keming Tools Co. Ltd. for the substantive offences punishable u/s. 420 IPC. Hence accused C.V. Madan, accused H.S. Nageshwaran and accused M/s. Keming Tools Co. Ltd. are held guilty and convicted accordingly.
The prosecution has also succeeded in proving its case beyond reasonable doubt against accused C.V. Madan for the substantive offences punishable u/s. 5(2) r/w section 5 (1) (d) of the Prevention of Corruption Act, 1947. Hence accused C.V. Madan is held guilty and convicted accordingly.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 168 OF 169 169 The prosecution however, has failed to prove its case beyond reasonable doubt against accused C.V. Madan for the offences punishable u/s 471 IPC. Hence accused C.V. Madan is acquitted from the charges of the offence punishable u/s 471 IPC.
ANNOUNCED IN THE OPEN COURT TODAY I.E. ON 23rd DECEMBER, 2016 (PITAMBER DUTT) SPECIAL JUDGE (PC ACT)(CBI):02 TIS HAZARI COURTS, DELHI 23.12.2016.
CC NO. 532187/16 (OLD CC NO. 07/11 CBI VS. C.V. MADAN & ORS. PAGE 169 OF 169